- Donor Advised Funds
The term donor advised fund (DAF) refers to an account held at a third-party organization, often community foundations. The DAF is owned and controlled by the third-party organization and the donor retains only advisory privileges over the distribution or investment of the funds in the account.
When a donor makes a contribution to a DAF, the third-party organization has legal control over it and the donor is eligible to take a charitable tax deduction. It is important to note that even though the donor retains advisory privileges over the funds in their DAF, the third-party organization owns and controls all funds in the account. As such, the third-party organization is the legal donor of the gift to IPTAY and all legal and tax credit for the gift is attributed to the third-party organization.
Federal law prohibits use of gifts from a donor advised fund or private foundation if tangible benefits, such as priority consideration for the purchase of athletic tickets, are received. Gifts from donor advised funds may not be used to fulfill an outstanding pledge agreement and no gift credit or priority points will be given to individual donors for these gifts. IPTAY can only accept gifts from donor advised funds if the donor expressly waives the right to any benefits that they might have otherwise received for making a donation.
- IRA Charitable Rollover
The charitable IRA rollover, or qualified charitable distribution (QCD), is a special provision allowing certain donors to exclude from taxable income, and count toward their required minimum distribution, certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities, including IPTAY.
IRS regulations require that the entire distribution transferred to a charitable organization must qualify for a Section 170 charitable deduction, and quid pro quo transfers are not permitted. IRA charitable rollover gifts may not be used to maintain or improve a donor’s standing in the priority points system. While an IRA charitable rollover gift may be made to an athletic-based foundation, the donor is not permitted to receive any priority points or other privileges in exchange for the gift. Otherwise, the gift will not be a qualified IRA charitable rollover.
A charity may not provide any goods or services in return for an IRA charitable rollover gift. If donors receive goods or services (e.g., the right to purchase tickets) that would have reduced their charitable deduction had they made an outright gift to the charity, the rollover of assets from an IRA will not qualify for the tax-free treatment under this provision and the distribution is taxable to the donor. Gifts to the donor that are disregarded (i.e., public recognition, token gifts, and insubstantial benefits) will not disqualify the contribution from the tax-free treatment.
A qualifying charitable IRA rollover is (1) made by a donor age 70 ½ or older, (2) is transferred from a traditional or Roth IRA directly to a permissible public charity, and (3) is completed during the applicable tax year. If the donor has not already taken the required minimum distribution in a given year, a qualifying rollover gift can count towards satisfying this requirement. An individual taxpayer’s total charitable IRA rollover gifts cannot exceed $100,000 per tax year.
The materials provided here are for informational purposes only and are not intended for your reliance in connection with any tax reporting obligation.
- Gifts from Private Foundations
IPTAY is recognized as a tax-exempt entity under IRC Section 501(c)(3) and is further classified as a Type III functionally integrated supporting organization of Clemson University under Section 509(a)(3). As such, a private foundation wishing to make a charitable contribution to IPTAY may request a written legal opinion related to IPTAY’s tax exempt classification, upon which it may rely. It is the policy of IPTAY that any priority points or other benefits related to any contributions by a private foundation will be issued in the name of that private foundation and not to any other person. The receipt of priority points or other benefits by the private foundation related to the charitable contribution may render the gift ineligible to meet the qualifying distribution rules of IRC Section 4942 applicable to private foundations. This is not intended as legal advice and is provided for informational purposes only. IPTAY encourages any private foundation considering a charitable contribution to IPTAY to consult with its own advisors to learn how these matters relate to such private foundation.