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Donor-Advised Funds: Tax Shelters or Vehicles for Good?

Donor-Advised Funds: Tax Shelters or Vehicles for Good?. Kelly Shipp Simone Deputy 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

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Donor-Advised Funds: Tax Shelters or Vehicles for Good?

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  1. Donor-Advised Funds:Tax Shelters or Vehicles for Good? Kelly Shipp Simone Deputy General Counsel November 15, 2012

  2. Agenda • Dirty Dozen • Government Studies • Other Studies • Practical considerations • Outlook

  3. 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

  4. 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

  5. Comparing the Data

  6. Comparing the Data

  7. 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

  8. 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

  9. Other Studies • Chronicle of Philanthropy • National Philanthropic Trust • CF Insights – Do More Than Grow Report

  10. Practical Considerations • Accurate Form 990 reporting on donor-advised funds is essential! • Schedule D, Part I

  11. Practical Considerations • Core Form 990 Form

  12. Practical Considerations • Inactive funds policy • Define an inactive fund • Procedures • Attempts to contact • Payout from fund or close fund • Exceptions

  13. Questions

  14. Resources Council on Foundations: legal@cof.org Kelly Simone, kelly.simone@cof.org, 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

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