Donor Advised Fund

Donor-advised funds allow you to take a more active role in how your charitable gifts are invested in the community.

Below are some frequently asked questions about donor-advised funds:


Who plays what roles in donor-advised funds?

The person who establishes the fund is the donor. The donor designates a fund advisor in the fund agreement as the only person who can suggest disbursements from the fund in the form of grants. The donor may also serve as the fund advisor, or may designate other living persons – business associates, friends, or relatives – to act as fund advisors to make grant recommendations. It is recommended that a single person be designated to submit a Grant Suggestion Form to CICF if more than one person is listed as the fund advisor. Funds having a substantial balance may designate a successor advisor to the fund who can pass the advising role to the next generation.
 

How do I make a recommendation for a grant from my fund?

Recommendations for grants are made in writing using a Grant Suggestion Form provided by CICF, or by using a secure online service that gives donors access via the Internet to the details of their fund through CICF Connect. Once fund advisors make recommendations, CICF staff carefully reviews the recommendations to make sure each organization is qualified, and also completes all other due diligence required or requested. If it cannot be determined that the organization is an IRS designated public charity, the Board of Directors has the right to reject the recommendation.
 

What types of charitable organizations can I support with a donor-advised fund?

Grants can be made to any U.S. entity recognized by the Internal Revenue Service (IRS) as a tax exempt, publicly-supported 501(c)(3) charitable organization, place of worship, public and private school, and governmental agency.


What can my advised-fund grants support/fund?

Your fund may support most programs or activities of a qualified charitable organization; grants must be a minimum of $250. Multi-year grants can be made in consultation with your CICF staff representative. CICF staff will gladly help you direct your giving to meet the needs of the organization or cause you want to support, and also to the charitable giving goals you have established.
 

Is my fund prohibited from making any type of grant?

The IRS prohibits donor-advised fund grants that pay membership dues; fulfill personal pledges; discharge or satisfy legally enforceable obligations; or for any purpose from which you will receive some benefit. Other ineligible grants include ticket purchases to fundraising dinners, greens fees for charity golf tournaments, grants to individuals, or grants to political campaigns.
 

Can my fund recommend grants outside central Indiana?

Yes. Though CICF’s objective is to support and enhance our local community, we understand that you may have interests outside of this geographic area and that there are many institutions with national and international importance you may wish to support. For international grantmaking, we need to make grants to publicly-supported U.S. 501(c)(3) not-for-profit organizations serving charitable needs overseas. CICF will identify the best manner of granting to those organizations so you can give effectively – anywhere in the world.
 

What about pledges?

The IRS requires that grants from donor-advised funds cannot fulfill pledges or pre-existing obligations. The word “pledge” implies a legal obligation on the part of CICF to satisfy a debt or that a contribution to CICF was restricted for another charity. Fund representatives may suggest multiple-year grants, allowing for an annual progress report from the charity, to ensure it still complies with the grant’s intent.
 

How can I check the balance of my donor-advised fund?

Fund statements, which include the fund balance, grant history and contribution history, are mailed to all fund advisors each February and August. You will also have access to this information by using CICF Connect, a secure online service that gives donors access to the details of their fund via the Internet.
 

Can my family or I receive benefits?

No. The IRS prohibits fund representatives, their families, and the fund’s donors from receiving goods or services from a charity in return for a grant. The funds cannot pay for travel expenses, membership dues, ticket purchases to a fundraising dinner, greens fees for a charity golf tournament, or grants to individuals. Grant distributions from a donor-advised fund are NOT tax deductible to a donor or fund representative. A donor can claim only donations into a donor-advised fund for a tax deduction. (Consult your tax advisor regarding the amount available to deduct.)
 

How are my grants acknowledged?

Only you or other fund representatives (designated by you at the fund’s inception) suggest distributions from the fund. A letter accompanies all grant checks from your fund. The letter specifically states the fund from which the grant is made (unless you prefer it to be anonymous) and the purpose of the grant. A copy of each grant letter is sent to you. For grants of $10,000 or more, we can ask the recipient to complete an evaluation form or provide any other reporting about how the grant was used at your request.
 

Are my grant recommendations final?

By IRS regulations, the CICF Board of Directors retains the legal responsibility for the distribution of all CICF funds. This is very routine and done four times per year (usually retroactively) at CICF Board Meetings as part of a consent agenda. The only time a grant would not be approved by the CICF Board would be if the grant is illegal, would jeopardize CICF’s not-for-profit status, or is being made for non-charitable purposes or to an unqualified organization. However, these situations are prevented from happening due to the due diligence conducted by CICF’s professional staff prior to the Board of Director’s review and approval.