Ca. Tax Lawyer Fall 2014, Volume 23, Number 3

Proposed Guidance for Donor Advised Funds1

By Courtney Nash Gardner and Jorge Lopez2


Donor-advised funds, in various forms, have been in existence for almost a century, and are among the most widely used charitable giving vehicles in philanthropy today. On August 17, 2006, President George W. Bush signed the Pension Protection Act of 2006, which included, for the first time, a definition of "Donor Advised Funds," and placed new rules on their use. Many of the provisions affecting Donor Advised Funds were extensions of the rules already applicable to private foundations, with little or no guidance explaining how to apply these rules to Donor Advised Funds.

Thus, practitioners generally look to guidance in the private foundation context to elucidate issues affecting Donor Advised Funds. However, the authors believe that the rules and guidance applicable to private foundations do not seamlessly apply to Donor Advised Funds because there are significant differences between Donor Advised Funds and private foundations. In addition, the lack of guidance creates confusion among practitioners and sponsoring organizations and limits the flexibility and functionality of Donor Advised Funds. Accordingly, this paper attempts to highlight a few key issues raised by the rules implemented under the Pension Protection Act, and provides recommendations on how these issues can be resolved through U.S. Treasury Regulations.

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