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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 of our donors:
Who plays what roles in donor-advised grants?
How do I make a recommendation for a grant from my fund?
What types of charitable organizations can I support with a donor-advised fund?
What can my advised-fund grants support/fund?
Is my fund prohibited from making any type of grant?
Can my fund recommend grants outside central Indiana?
What about pledges?
Can my family or I receive benefits?
How are my grants acknowledged?
Are my grant recommendations final?
Who plays what roles in donor-advised grants?
A donor is the person who establishes the fund. A fund advisor is designated by the donor in the fund agreement as the only person who can suggest disbursements from the fund. The donor may 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 if more than one person is listed as the fund advisor, that a single person be designated to submit a Grant Suggestion Form to CICF. Funds having a substantial balance may designate a successor advisor to the fund that can pass the advising role from generation to 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. Once fund representatives make recommendations, CICF staff carefully checks to make sure each organization is qualified. 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.
Central Indiana Community Foundation (CICF) encourages you to support our seven vision priorities:
- respond to basic needs
- develop productive citizens
- build strong neighborhoods
- embrace inclusiveness
- promote community amenities
- promote philanthropy; and
- promote our community. Even though you may make grants to any U.S. 501(c)(3), nearly any organization that you value and recommend may be described by one of these priority areas.
What can my advised-fund grants support/fund?
Your fund may support most programs or activities of a qualified charitable organization. Examples include: general operating support, museum exhibits, laboratory equipment, a neighborhood project, child care programs, or underwriting a particular development effort. Grants must be a minimum of $250. Multi-year grants can be made in consultation with your philanthropic advisor. You can also designate a grant in honor of or in memory of a person or event.
Is my fund prohibited from making any type of grant?
The IRS restricts grants from donor-advised funds to 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. While one of CICF’s objectives is to make grants that benefit our local community, grants also can be made to institutions outside the local area. And, grants can also be made to publicly supported U.S. 501(c)(3) not-for-profit organizations serving charitable needs in other countries. However, grants to non-U.S. organizations in foreign countries are not permitted.
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.
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 fund representatives or their family members for travel expenses or other costs. Grant distributions from a donor advised fund are NOT tax deductible to a donor or fund representative. Only donations into a donor-advised fund can be claimed for a tax deduction by a donor. (Consult your tax advisor regarding the amount available to deduct.)
How are my grants acknowledged?
An award letter accompanies all grant checks from an advised fund. The letter specifically identifies the fund from which the grant is made and the purpose of the grant. Grants can also be made anonymously if you desire. A copy of each grant award letter is sent to you. CICF can forward all thank you letters from not-for-profit organizations to you upon request.
Are my grant recommendations final?
The vast majority of the time, CICF honors all grant recommendations that meet IRS requirements. However, in all cases the board of directors of Central Indiana Community Foundation is legally bound to determine how the funds are distributed. The Foundation must adhere to IRS regulations regarding advised-fund donors’ recommendations. IRS rules stipulate that a donor cannot make a tax-deductible contribution while at the same time retaining control over his or her contribution. However, the law expressly recognizes the right of living donors to make grant recommendations.
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