Donor-advised funds and tables at events

May 01, 2018

Excerpt from Chronicle of Philanthropy article published May 1, 2018:

The IRS has given rules on galas and other events another look, too. Because donors receive something of benefit from a gala (food and entertainment), paying through a donor-advised fund presents challenges.

All of the money in a donor-advised fund has already been subject to a tax deduction, so a gift from an account can’t cover personal benefits. Some sponsors will bifurcate payments, which means donors can pay for tickets to an event through their funds but cover the cost of dinner or other benefits out-of-pocket. And sometimes a donor will pay for a table at a gala but not attend. This is fine, as long as the guests at the table are not associated with the donor because hosting one’s friends could be a benefit even if you are not there.

Ken Nopar, senior philanthropic adviser at American Endowment Foundation, urges caution about accepting DAF money for events until the IRS comes out with a final rule.

"We’re looking to the IRS to tell us once and for all," he said.

Read the full article here.