A Note About Donor Advised Funds

December 20, 2015

Some people prefer to donate to charity using donor advised funds (DAFs). We are grateful for all donations and wish to advise our supporters on several important Internal Revenue Service rules governing DAFs.

Although a DAF cannot be used to fulfill a legally binding personal pledge or to make gifts for which a donor will receive certain benefits, it may still be used in other meaningful ways to accomplish the same goal. For example, the administrator of your fund may enter into a pledge agreement directly with the Foundation.

DAFs also can be used to support events benefiting the John Wayne Cancer Institute, but in limited ways so as not to infringe on IRS rules. For example, DAFs can be used as an additional gift outside of the full price of admission paid by the donor. They can also be used for sponsorship opportunities, so long as the sponsorship benefits do not amount to more than an incidental personal gain to the donor. (Meals, preferential access and/or seating are considered non-incidental benefits.) Thus DAFs can be used to purchase tables if the donor does not attend the event and plans to donate the table back to the Institute.

When DAFs are used to pay for tickets to a nonprofit event, the IRS no longer allows for the deductible and nondeductible portions of admission to be split. Moreover, the IRS prohibits DAF account holders, additional account users and any of their family members from receiving more than incidental benefits (e.g., small tokens of appreciation such as key chains, coffee mugs, etc.) associated with the DAF grant recommendations.

Visit www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Donor-Advised-Funds. For additional guidance from the Foundation, please call Tanya Lopez at 310-582-7095.