EFTA00607663.pdf

V Grants to Organizations from Donor Advised Funds: Is Expenditure COUNCIL on FOUNDATIONS Responsibility Required? I Is the grantee a Section 501(c)(3) organization? Is the grantee a Grant is not to a charity No unit of No or governmental unit. Sources for determination: government? Expenditure • IRS Publication 78 responsibility required. • IRS Business Master File • IRS Letter of Determination • Third-party provider' Yes K [ Expenditure esponsibility not required. Yes Is the grantee a private foundation? Is the grantee a Section 509(a)(1) Is the grantee a Section 509(a)(4) or 509(a)(2) public charity? public charity? Sources for determination: The grantee is a • IRS Publication 78 Sources for determination: Sources for determination: Section 509(a)(3) No No No • IRS Business Master File --0. • IRS Business Master File • IRS Business Master File supporting • IRS Letter of Determination • IRS Letter of Determination organization.*** • IRS Letter of Determination • Third-party provider' • Third-party provider* Continue analysis on • Third-party provider' next chart. K Yes Yes I Yes ' A sponsoring organization may rely on a Expenditure responsibility Expenditure esponsibility third-party provider if the provider pulls the Is the grantee a private operating information from the most currently foundation under Section 4942(j)(3)? not required. required. available monthly update to the business master file. and the sponsoring Sources for determination: organization retains a report with particular • IRS Publication 78 required information. Grant is to a private non-operating No '[ • IRS Business Master File • The Council on Foundations continues to • IRS Letter of Determination foundation. Expenditure responsibility required.** recommend against grants to private non- • Third-party provider' operating foundations from donor advised funds. 1 Yes • The information from the IRS Business Master File. IRS Letter of Determination or Third-party provider should confirm this Expenditure esponsibility classification. If not. additional information not required. will need to be collected for clarification. EFTA00607663  Grants to Section 509(a)(3) Organizations (Supporting Organizations) from COUNCIL on FOUNDATIONS Donor Advised Funds: Is Expenditure Responsibility Required? Is the supporting organization a Type or Type II supporting organization? K Is the organization that the Sources for determination: grantee supporting organization • IRS Letter of Determination* Yes supports controlled directly or -0. indirectly by the donor, advisor. • Written opinion of counsel or related party? (Note that an • Written representation from grantee organization may have multiple combined with sponsoring supported organizations.) organization review of supporting organization's governing document Sources for determination: 1 • No IRS guidance provides a No clear method for making this determination. Yes Expenditure responsibility 1 • required. K The supporting organization is a Type • The question to investigate is whether the donor, advisor or III. Is the Type III supporting related parties may. separately organization functionally integrated? or by aggregating their votes or positions or authority, require a Sources for determination: supported organization to • IRS Letter of Determination* Yes make an expenditure or fr. • Written opinion of counsel prevent a supported • Written representation from grantee organization from making an combined with sponsoring expenditure. • Some IRS letters of determination organization review of supporting will include a determination of supporting organization Type. organization's governing documents and written representations from K However. most letters will not. Another method of determination each supported organization No will be required if the IRS letter of ♦ K Expenditure esponsibility determination does not explicitly provide a determination of Type or. not required. in the case of a Type III. whether No the organization is functionally integrated. Expenditure responsibility required. The information provided here is based on our continuing analysis of the Pension Protection Act. Every effort has been made to ensure accuracy of these documents. Please understand, however, that due to the complexity of the law and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information is subject to change. The information is not a substitute for expert legal, tax or other professional advice and we strongly encourage grantmakers and donors to work with their counsel to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. EFTA00607664