What is a donor advised fund?
A donor advised fund is a charitable account managed by a 501(c)(3) organization that allows individuals, groups, or organizations to set aside money for future allocation to their preferred causes and nonprofits. By contributing to a donor advised fund, you receive an immediate tax deduction, and your money can grow through investments.
Benefits of a donor advised fund
A donor advised fund makes it easy to support the issues and organizations you care about while alleviating you of all the administrative and investing oversight that establishing a private foundation entails. By working with The Alaska Community Foundation (ACF), you benefit from ACF’s professional investment management services, due diligence, and years of grantmaking experience. As a fund advisor, you recommend grants as often as you’d like, as well as receive quarterly statements showing all fund activity, including grants from and gifts to the fund.
Frequently Asked Questions
What kind of grants can be made from a donor advised fund?
Grants from donor advised funds can be directed to most nonprofits in local communities, Alaska, or nationwide. In accordance with IRS rules, grants from donor advised funds may not be used for grants to individuals or fulfillment of prior pledges.
Can fund holders recommend grants from donor advised fund to individuals?
No. The Pension Protection Act of 2006 prohibits grants from donor advised funds directly to individuals, or for use as a scholarship for specific individuals.
Can I direct a grant from my donor advised fund to a different fund at The Alaska Community Foundation (ACF)?
Yes. Funds at ACF are eligible to receive a grant from your donor advised fund.
Are grant recommendations ever denied?
The Alaska Community Foundation (ACF) honors the grant recommendations of donor advised fund holders in most cases. However, it must be understood that the gift is the property of ACF, and the ultimate decision regarding any grant resides with the community foundation. If the balance of the fund accommodates the grant request and the potential recipient nonprofit is eligible based on ACF’s Grantmaking and Due Diligence Policy, the recommendation will generally be approved and processed. See the policy below for more information.
Is fundraising for a donor advised fund permitted?
Yes, under various circumstances when in alignment with community foundation policies. However, fundraising plans must be approved by The Alaska Community Foundation prior to the activity/event.
Do grants have to be made every year?
Unlike a private foundation that is required to make distributions or to pay excise taxes, The Alaska Community Foundation (ACF) has developed a flexible spending policy that provides for distributions. Grants do not have to be made every year. However, if no grants have been made from a fund for three consecutive years, ACF will attempt to contact the fund advisor(s). After several years of inactivity and if ACF is unable to contact the fund advisor(s), a donor advised fund may be turned into a designated, unrestricted, or field of interest fund that honors the donor’s original intent but is managed by ACF.
Can more than one person be an advisor?
Yes. In addition to individuals, groups, boards, and companies can also be named as fund advisors with a maximum of three advisors.
Can a fund advisor change current advisors or name successor advisors?
Yes, additional or successor advisors may be named in accordance with the original fund agreement.
How does a fund advisor recommend grants from a donor advised fund at The Alaska Community Foundation (ACF)?
The easiest way to make a grant recommendation is via the online donor portal. If you need help accessing your portal, contact ACF.
How often can grants be recommended?
A fund advisor can recommend grants as often as they like. Please be aware that it takes The Alaska Community Foundation around 10 business days to process a grant request.
Can I direct all or part of my Required Minimum Distribution (RMD) as a Qualified Charitable Distribution (QCD) to my donor advised fund?
No. In regard to RMDs, the IRS does not consider a contribution to a donor advised fund as a QCD.