Donor-Advised Funds Under Attack: IRS Business Plan Unveiled

A donor-advised fund is a fund typically held by a public charity consisting of money contributed by an individual or entity. The donor or its designee retains the privilege of making non-binding recommendations to the governing body of the public charity as to the recipients of grants from the fund. The public charity is the owner of the principal amount of the gift along with any income generated by the gift. It can decline to follow or only partially follow the donor’s suggestions without any obligation to the donor. The donor sacrifices control of the contributions because the donor’s recommendations are advisory only; further the right to advise is often limited by the life span of the donor. A donor-advised fund program is attractive to many donors who want advice and administrative services. They are willing to sacrifice ultimate control over their funds in exchange for these services.