2217 Donor Advised Fund

Document purpose

To accommodate the needs of donors who wish to contribute to the University through Donor Advised Funds. To identify and meet relevant legal and tax issues associated with Donor Advised Fund.

effective

July, 2003

revised

September, 2019

Reviewed

May, 2021

Responsible Office

Treasurer

Approval

Treasurer

Policy

 

Donors may wish to contribute to the University by making a recommendation for a grant from a donor advised fund sponsored by a financial institution or other entity (the “DAF Sponsor”). Often the donor or a member of the donor’s family serves as the donor advised fund advisor (the “DAF Advisor”) for such donor advised fund.  The DAF Advisor has the authority to recommend grants to the DAF Sponsor.

 

Some donor advised fund grants require submission of a Grant Eligibility Application before a grant is made to the University. It is the responsibility of the Vice President of Finance and Treasurer to sign all such applications. A copy of the University’s IRS 501(c)(3) determination letter must be attached to each Application. This may be obtained through the Tax Office or the Office of Gifts Accounting & Administration.

 

CHARITABLE PURPOSES

 

All grants from a donor advised fund to the University must be made for charitable purposes. For example, a grant for the specific benefit of a designated person (e.g. a care or service provider, student, faculty member or volunteer) is prohibited.

CONDITIONS ON GRANTS

Donor advised fund grants may be received by the University subject to certain conditions as recommended by the DAF Advisor and agreed between the DAF Sponsor and the University.  A DAF Advisor may also recommend (and the DAF Sponsor and the University may agree) that a grant will be paid out over multiple years, or be subject to ongoing grant approvals, reporting and due diligence.

 

 

 

GRANTS USED INTERNATIONALLY

Grants can be accepted for University projects that are carried on in other countries. However, a grant from a US-based DAF Sponsor cannot be made to any non-US University entity or affiliate.

GUIDELINES FOR EVENTS & MEMBERSHIPS

Based on federal tax law, a grant from a donor advised fund cannot result in benefits, goods, or services to the donor, the DAF Advisor, members of their families, businesses they control, or any other related parties (these are typically called “personal benefits”). Prohibited benefits generally include tickets, memberships, event tickets, meals, sponsorships, registration fees, preferred parking, preferred seating, discounted merchandise or other preferential treatment from the University.  Failure to observe this restriction can subject the University, the DAF Advisor and the donor to tax penalties. The University has established specific guidelines for events and memberships, which are two of the more common kinds of personal benefits that give rise to questions from the University’s donors.  The guidelines are as follows:

Events

Federal tax laws provide that it is not permissible for donors or DAF advisors to recommend a grant to fund all or any portion of the purchase price of a table or ticket for an event when the table/ticket purchase is comprised of both a tax-deductible portion and a non-tax deductible (personal benefit) portion, even if the donor or DAF Advisor wishes to pay the non-deductible portion from a personal source.

 

Memberships

Under federal tax laws, grants from donor-advised funds to cover membership fees are acceptable if:

  1. The membership benefits are limited to incidental benefits defined under then-current IRS rules; current examples include free or discounted admission to low-cost events, parking, preferred access, and attendance at certain members-only events; or
  2. The donor waives and declines all of the non-deductible personal benefits, assuming that the membership offers, and can implement, the option to waive and decline such personal benefits.

 

 

GUIDELINES FOR PLEDGES

Under federal tax law, donor advised fund grants cannot be used to satisfy all or any portion of a personal pledge or other financial obligation of either the donor, the DAF Advisor, or any related parties to the University.

Although a donor advised fund may not pledge account assets to Section 501(c)(3) and 501(c)(4) organizations, a DAF Advisor may notify the DAF Sponsor verbally or in writing about the DAF Advisor’s intention to make a specific grant recommendation in the future.  Any such writing should state that the DAF Advisor is intending to recommend a grant from a donor advised fund in the future, and should further state that neither the notification of the DAF Advisor’s intention nor any later grant is or will made in satisfaction of a legally binding commitment or pledge