Private Foundations: Tax Law and Compliance, 4th Edition

Chapter SixteenDonor-Advised Funds

1. § 16.1 Basic Definitions
2. § 16.2 General Concept of a Gift
3. § 16.3 Types of Donor Funds
4. § 16.4 IRS Challenges to Donor Funds
5. § 16.5 Prohibited Material Restrictions
6. § 16.6 Department of Justice Position
7. § 16.7 Public Charity Status of Funds
8. § 16.8 Interrelationship of Private Foundation Rules
9. § 16.9 Statutory Criteria
10. § 16.10 Department of Treasury Study
11. § 16.11 Congressional Research Service Study
    1. (a) Statistics
    2. (b) Policy Considerations

One of the most controversial entities in the realm of charitable organizations is the donor-advised fund. These funds are created and maintained within public charities,¹ such as community foundations, colleges and universities, churches, and charitable gift funds. Indeed, these funds were initiated by community foundations, which have existed since the early 1900s. Today, there are about 400 community foundations and a growing number of charitable gift funds, accounting for billions of dollars in assets and income.

Thus, while this giving vehicle has been part of the federal tax law of charity for nearly a century, only recently has it become the subject of considerable scrutiny and criticism. Indeed, several federal tax issues are involved, all resting on the fundamental fact that the donor-advised fund can be an alternative to a private foundation. Some choose to state the matter somewhat differently, regarding donor-advised funds as a means of sidestepping or avoiding the private foundation rules. A ...