Is Converting Your Foundation to a Donor-Advised Fund Right For You?
This survey can help you determine if a donor-advised fund account makes sense for you. Whether you want to convert your private foundation to a donor-advised fund account or are considering one as a complement to your foundation, Schwab Charitable can help.
Since charitable giving is rewarded and encouraged through tax benefits to the donor, the IRS has established specific requirements for charitable activities that must be followed carefully. These include recordkeeping, grant due diligence and annual reporting.
Private Foundations:Private foundations are subject to fairly complex rules and regulations which are outlined in IRS Publication 578. Many foundations hire paid staff, consultants, attorneys and/or accountants to help manage their foundations to ensure compliance with these IRS requirements. It is the responsibility of the board of directors of the foundation to comply. Risks of non-compliance include revocation of the foundation's tax-exempt status, fines and negative publicity.
Donor-Advised Funds:Individual donor-advised fund accounts are not responsible for IRS filings or regulatory compliance. Instead, the donor-advised fund sponsor (such as Schwab Charitable Fund) files an aggregated return and assumes administrative, recordkeeping and oversight responsibilities for its donor-advised accounts. For example, the donor-advised fund sponsor takes on the responsibility to evaluate charitable grant recipients against certain IRS and government agency databases to confirm they are in good standing.