DS9 Document EFTA00607663

V COUNCIL on FOUNDATIONS Grants to Organizations from Donor Advised Funds: Is Expenditure Responsibility Required? I Is the grantee a Section 501(c)(3) organization? No Is the grantee a unit of No Grant is not to a charity or governmental unit. Sources for determination: • IRS Publication 78 government? Expenditure responsibility required. • IRS Business Master File • IRS Letter of Determination • Third-party provider' Yes K Yes [ Expenditure esponsibility not required. Is the grantee a private foundation? Is the grantee a Section 509(a)(1) or 509(a)(2) public charity? Is the grantee a Section 509(a)(4) public charity? Sources for determination: • IRS Publication 78 No --0. Sources for determination: No Sources for determination: • IRS Business Master File • IRS Letter of Determination • Third-party provider' • IRS Business Master File • IRS Letter of Determination • Third-party provider' • IRS Business Master File • IRS Letter of Determination • Third-party provider* Yes K Yes I Yes Is the grantee a private operating Expenditure responsibility Expenditure esponsibility foundation under Section 4942(j)(3)? not required. required. Sources for determination: • IRS Publication 78 • IRS Business Master File • IRS Letter of Determination • Third-party provider' No '[ Grant is to a private non-operating foundation. Expenditure responsibility required.** 1 Yes Expenditure esponsibility not required. No The grantee is a Section 509(a)(3) supporting organization.*** Continue analysis on next chart. ' A sponsoring organization may rely on a third-party provider if the provider pulls the information from the most currently available monthly update to the business master file. and the sponsoring organization retains a report with particular required information. • The Council on Foundations continues to recommend against grants to private non- operating foundations from donor advised funds. • The information from the IRS Business Master File. IRS Letter of Determination or Third-party provider should confirm this classification. If not. additional information will need to be collected for clarification. EFTA00607663 COUNCIL on FOUNDATIONS Grants to Section 509(a)(3) Organizations (Supporting Organizations) from Donor Advised Funds: Is Expenditure Responsibility Required? Is the supporting organization a Type or Type II supporting organization? K Is the organization that the Sources for determination: grantee supporting organization • IRS Letter of Determination* • Written opinion of counsel • Written representation from grantee combined with sponsoring organization review of supporting Yes -0. supports controlled directly or indirectly by the donor, advisor. or related party? (Note that an organization may have multiple supported organizations.) organization's governing document Sources for determination: 1 • No IRS guidance provides a clear method for making this determination. Yes • No K The supporting organization is a Type • The question to investigate is whether the donor, advisor or III. Is the Type III supporting related parties may. separately organization functionally integrated? or by aggregating their votes or positions or authority, require a Sources for determination: supported organization to • IRS Letter of Determination* • Written opinion of counsel Yes fr. make an expenditure or prevent a supported • Written representation from grantee combined with sponsoring organization from making an expenditure. organization review of supporting organization's governing documents and written representations from each supported organization K K ♦ No Expenditure esponsibility not required. No Expenditure responsibility required. Expenditure responsibility 1 required. • Some IRS letters of determination will include a determination of supporting organization Type. However. most letters will not. Another method of determination will be required if the IRS letter of determination does not explicitly provide a determination of Type or. in the case of a Type III. whether the organization is functionally integrated. The information provided here is based on our continuing analysis of the Pension Protection Act. Every effort has been made to ensure accuracy of these documents. Please understand, however, that due to the complexity of the law and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information is subject to change. The information is not a substitute for expert legal, tax or other professional advice and we strongly encourage grantmakers and donors to work with their counsel to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. EFTA00607664