According to the IRS, a donor-advised fund is a separately identified fund or account that is maintained, operated, and legally controlled by a section 501(c)(3) organization, which is called a sponsoring organization. This may be a community foundation, public charity, or a charitable fund associated with an investment firm.
Increasingly, individual donors are choosing to contribute to donor-advised funds because they can advise how funds are invested and distributed, yet they can avoid the administrative requirements and operating costs involved with managing a separate private foundation.
Unlike private foundations, donor-advised funds do not have minimum payout requirements, but lawmakers are considering making similar payout rules for them. Also, these funds can be relatively anonymous because they are not required to disclose as much information about their charitable giving.
Thus, finding detailed, public information about a donor-advised fund's grantmaking activities can be challenging for grantseekers and researchers. The IRS requires sponsoring organizations to report the following as part of their annual (990) tax filing:
- the total number of donor-advised funds the sponsoring organization owns at the end of the tax year
- the aggregate value of assets held in such funds at the end of the taxable year
- the aggregate value of contributions to such funds during the taxable year
- the aggregate value of grants made from such funds during the taxable year
The Chronicle of Philanthropy provides some tips for nonprofits researching donor-advised funds. Among other things, it suggests connecting with the sponsoring organizations, which may provide donors information about local nonprofits.
The Council on Foundations' Community Foundation Locator can help you find community foundations in your area.
Foundation Directory Online, our searchable database of grantmakers, also can help you find sponsoring organizations. You might start with a Grantmaker Type search for "community foundation", or a Keyword search for "donor advised fund". You can subscribe online, or use it for free at our libraries and Cooperating Collections nationwide.
Selected resources below may also be helpful.
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