Viewing entries tagged
Donor-advised funds


Treasury Department Publishes Study on Supporting Organizations and Donor-Advised Funds

President Bush signs the
Pension Protection Act.
 On December 6, 2011, the Treasury Department reported to Congress on the results of the Pension Protection Act of 2006. The report specifically addressed whether the tax deduction for contributions to supporting organizations and donor-advised funds is appropriate, given issues around the use of charitable contributions for the benefit of the donor.

The report describes how federal tax law treats supporting organizations and donor-advised funds, providing a statistical analysis of such organizations based on IRS income data from 1985-2006 and individual income-tax returns. The report also covers public comments in response to IRS Notice 2007-21. Respondents felt donor advised funds assisted donors, but did not agree that consolidated reporting of funds was appropriate.

The Treasury ultimately concludes that the contribution deduction rules for donor-advised funds and supporting organizations are appropriate because donors relinquish control of assets and because the time lapse between the receipt and use of assets is the same as the time lapse that applies to the use of assets by any other public charities. Furthermore, sponsoring organizations have no legal duty to use the funds in the way preferred by the donor. As a result, the Treasury does not recommend new legislation at this time.