Donor Advised Funds

Donor advised funds have been a part of the federal tax law of charity for nearly a century as a unique philanthropic tool. Because of the relatively small amount needed to start a DAF compared to assets needed to create a private foundation, DAFs serve as an opportunity for middle class Americans to pursue their philanthropy and to gain the benefit of the foundations’ expertise and experience in helping to guide their giving. Use these resources to learn more and gain valuable insight into managing and administering Donor Advised Funds.

These are a few examples of DAFs that are sparking tremendous change in their communities:

In-Depth knowledge on Donor Advised Funds

The Council created these communications tools to assist our members in sharing how donor advised funds are being used to impact their communities. The toolkit includes sample templates and other useful resources to share with local media and other stakeholders in your community.

The Pension Protection Act of 2006 includes the first comprehensive regulation of donor advised funds. These requirements generally took effect at the beginning of the tax year following enactment of the Act, for charities that hold assets in such funds. However, a provision barring the payment from donor advised funds of grants, compensation and similar payments to donors, advisors, and persons related to them took effect immediately on August 17, 2006. Understanding the definition of what is a donor advised fund also is important to the implementation of the Act’s charitable IRA rollover provision because rollovers are not permitted into donor advised funds.

In Notice 2007-21, the Treasury Department and IRS requested comments on issues relating to the organization and operation of donor advised funds and supporting organizations, to be included in a study of these organizations. The resulting report includes detailed discussion of the legal requirements for supporting organizations and donor advised funds, an analysis of available statistical information about DAFs and SOs, and more.

For international grants, the Pension Protection Act requires donor-advised funds to comply with certain rules imposed on private foundations. Sponsoring organizations administering international grants from advised funds have adopted various practices to comply with the new requirements. This article discusses these changes, along with a brief description of the new rules.