Donor Advised Funds

Donor Advised Funds allow you to remain involved by recommending distributions at any time to benefit any 501(c)(3) public charity.

Akin to a private foundation, a donor advised fund gives you flexibility and convenience to further your philanthropic goals. You receive a tax deduction at the time funds are contributed into your account. Although there is no annual distribution requirement, Communities Foundation of Oklahoma encourages our Donor Advised Funds to grant at least 5% of the value of your account each year.

It is easy to establish a new donor advised fund or add donations to an existing fund at any time.  Reach out to a friendly member of our team so that we can guide you through the process.  1.405.488.1450

 


Frequently Asked Questions

Donor Advised Funds (DAFs) have been part of charity for nearly a century, and have long been a staple of community foundations.  The following Frequently Asked Questions have been prepared to answer some of the questions we routinely receive.  

How is a DAF different from a private foundation?

In general, contributions to a Donor Advised Fund (DAF) are treated as contributions to a public charity, thus providing donors some advantages over private foundations. For example, donors may claim a higher charitable deduction (up to 50% of adjusted gross income when giving to a public charity vs. 30% to a private foundation).  And, DAFs are not currently subject to annual payout requirements that apply to private foundations.  

In exchange for this preferential treatment, DAF donors surrender legal control to the sponsoring organization (in this case, Communities Foundation of Oklahoma).  At the time a new DAF is established, the sponsoring organization will appoint Fund Advisors who have the opportunity to recommend, but not direct, donations to be made from the DAF. Advisory privileges refer to the right of a donor to provide non-compulsory recommendations, suggestions, or consultative advice.

SPECIAL NOTE:  As a public charity sponsoring Donor Advised Funds, we are required to explicitly disclose that donors contributing to a DAF may not impose restrictions or conditions on the assets legally given to the DAF.  

How do Fund Advisors recommend grants?

Any authorized Fund Advisor (as documented on the current Exhibit A fund document) may recommend a grant distribution from the DAF at any time.  Grant distributions can be made to any 501(c)(3) public charity, governmental agency, or organization classified as a church.  Grant recommendations need to be submitted in writing or via the DAF online portal (coming in 2017).  Please contact Randy Macon with all matters related to DAF grant recommendations.  rmacon@cfok.org  

How are account statements shared?

Authorized Fund Advisors (as documented on the current Exhibit A Fund Document) currently receive quarterly statements via email.  These statements provide current account balance, investment performance, distributions made, etc.  Coming in 2017, CFO will launch a new Donor Portal which will provide real-time information and allow Donor Advisors to recommend grant distributions at any time.  Stay tuned for additional information and training on the new Donor Portal over the coming months.

Are DAF advisors permitted to provide recommendations for charitable distributions from the account?

Yes!  Any current DAF Fund Advisor (as documented on the current Exhibit A Fund Document) may provide recommendations for grants to be awarded to qualifying recipient organizations at any time.  Currently, these recommendations may be submitted via email, U.S. Mail, or fax.  Starting in 2017 DAF Advisors will be given access to a secure Donor Portal that will allow these recommendations to be entered directly into our system. 

To provide DAF recommendations by mail, please address your envelope to Communities Foundation of Oklahoma, attention Executive Director, PO BOX 21210, Oklahoma City, OK 73156

DAF recommendations may be faxed to 405.755.0938 or emailed to Randy Macon at rmacon@cfok.org 

Once received, the CFO team will evaluate each recommendation to ensure the following required conditions are met:

  • The recommended recipient exists as a tax-exempt organization in good standing with the IRS at the time the grant is to be awarded.  This means the organization is a Public Charity described in IRC 509(a)(1) or 509(a)(2) and verified using the industry-standard Guidestar Charity Check system.  Grants may also be made to churches, public schools, and/or governmental organizations provided we are able to document other required information.  DAFs are not able to make grants to individuals, for-profit corporations, or Type III Supporting Organizations that are not functionally integrated per IRC 509(a)(3).
  • No goods or services will be provided to the DAF Advisor and any donor having contributed to the DAF 
  • The grant recommendation clearly supports charitable efforts and activities as defined in IRC 170(c)(2)(B).

Does CFO have the final decision-making authority on how distributions from a DAF account are made?

Yes.  As a sponsoring organization that is also a public charity, CFO must always have the ultimate decision-making authority regarding how to distribute funds contributed to a DAF or any type of account held at CFO.  Donor's must know their recommendations are always considered to be "advisory."  CFO uses the criteria explained in the section above labeled "Are DAF advisors permitted to provide recommendations for charitable distributions from the account?" when reviewing advisor recommendations.  

If a donor seeks more direct control over how charitable grants are to be awarded, s/he should explore the option of establishing a Private Foundation instead of a Donor Advised Fund. 

Are donors able to select investment options?

Yes.  CFO offers three pooled investment options.  Learn more about the Balanced, Conservative, and Growth pools, and access historical returns, by visiting  Financials, Policies and Publications  (note: this link opens a new window)

Alternatively, donors may recommend an investment option apart from the three pooled options referenced above.  These recommendations must be scrutinized to ensure no impermissible private benefit to the donors will occur AND both CFO's Finance/Investment Committee and the full Board of Trustees must agree and formally vote to approve the recommendation ensuring it aligns with CFO's best interest and exclusive charitable purpose.  CFO's Board of Trustees retains final decision-making authority regarding all investments. 

Remember that Donor Advised Funds are intended to accomplish charitable purposes rather than to generate fees from securities trading for investment advisors.  If any recommended arrangement appears to produce too much private benefit to a financial company, CFO will not be able to approve the recommendation as it could jeopardize our exemption.

 

Can current Fund Advisors appoint Successor Advisors?

Yes.  We encourage our DAF accounts to review and routinely update both current Fund Advisors and those appointed to be Successor Advisors in the event all current Fund Advisors become unable to serve in this capacity.  Both types of Advisors are documented as part of the Exhibit A Fund Document.  Changes can be made at any time by contacting our Executive Director.  rmacon@cfok.org  |  1.405.488.1450

In the event all current Fund Advisors become unable to fulfill their duties and no Successor Advisors have been appointed, CFO's Board of Trustees will review options and, if necessary, exercise Variance Powers to redirect remaining funds to a charitable organization that aligns with donor intent. 

Am I required to distribute a minimum amount each year?

Not at this time.  CFO encourages, but does not require, DAFs to distribute at least 5% of the account's value each year.

Can a DAF make a distribution to an individual?

No.  Section 4966 imposes an excise tax on distributions from a DAF to individuals; therefore, CFO is not able to approve these types of distributions. 

How can I learn more?

Please review the IRS document titled Donor-Advised Funds Guide Sheet Explanation (note: this link will open a new internet browser window)

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