Donor-Advised Funds:Tax Shelters or Vehicles for Good?
Kelly Shipp SimoneDeputy General Counsel
November 15, 2012
Agenda
• Dirty Dozen• Government Studies• Other Studies• Practical considerations• Outlook
Dirty Dozen Tax Scams
• DAFs included in annual listing from 2005-2007"The IRS continues to observe the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income…”
• Removed after PPA defined and regulated DAFs
Government Studies
• Treasury Study– Mandated by Congress in 2006– Released December 2011– Based on 2006 data
• Congressional Research Service Analysis– Released in July 2012– Based on 2008 data
Comparing the DataTreasury Study CRS Analysis
Data Year 2006 2008
# of Sponsoring Organizations
2398 1818
# of DAFs 160,000 181,000
DAF assets $31.1 billion $29.5
Average # of DAFs per sponsoring org
85 100
DAF assets $31.1 billion $29.5 billion
Comparing the DataTreasury Study CRS Analysis
Average aggregate DAF payout from all sponsoring organizations (SPORGS)
9.3% 13.1%
Median (all SPORGS) 0.6% 6.1%
25 percentile (all SPORGS)
0.0% 0.0%
Average aggregate DAF payout from CFs
9.3% ---
Median from CF DAFs 7.0% ---
25 percentile for CF DAFs 1.9% ---
Observations
• Payout rates are focused on grants only• CRS Report notes that SPORGS with one
DAF tend to payout less than those with many accounts
• CRS Report made observations about behavior of individual DAFs based on reports of SPORGS with 1 DAF
Policy Considerations
• Treasury Study – Same charitable deduction to DAF as
contributions to other public charities– Premature to recommend a distribution
requirement for DAFs– Donors advisory privileges do not make an
incomplete gift
• CRS Analysis– Questioned Treasury Study conclusions
Other Studies
• Chronicle of Philanthropy• National Philanthropic Trust• CF Insights – Do More Than Grow Report
Practical Considerations
• Accurate Form 990 reporting on donor-advised funds is essential!
• Schedule D, Part I
Practical Considerations
• Core Form 990 Form
Practical Considerations
• Inactive funds policy– Define an inactive fund– Procedures
• Attempts to contact• Payout from fund or close fund
– Exceptions
QUESTIONS
Resources
Council on Foundations:[email protected] Kelly Simone, [email protected], 703-879-0716
Full Study Names: December 2011 Treasury Study: Report to Congress on Supporting Organizations and Donor Advised Funds
July 11, 2012 CRS Analysis: An Analysis of Charitable Giving and Donor Advised Funds
