IRS Regulations on Donor Advised Funds
The Catholic Foundation is grateful for all of our donor advised fund holders and we wanted to make you aware of the following information.
The IRS has reaffirmed its guidance that Donor Advised Fund (DAF) grants may not be bifurcated to purchase tickets to events or sponsorships (IRS Notice 2017-73 https://www.irs.gov/pub/irs-drop/n-17-73.pdf).
You may recommend grants from your Donor Advised Fund to sponsor charitable events, dinners, etc. However, the federal tax rules require that the full cost to attend such an event, including both the tax-deductible and non-deductible portions, must be paid from your personal funds and not from DAF dollars.
After personally paying for event tickets, any remaining sponsorship costs may be covered by your DAF, provided that any benefits received in exchange for the sponsorship are incidental, such as having your DAF recognized at the event. If you choose not to accept any benefits associated with a sponsorship (e.g., attending the event), the entire amount may be paid from your DAF.
A $10,000 event sponsorship includes a table for 10 and your name or logo in event materials. If the lowest ticket price to attend the event is $100, you will pay $1,000 for the table from your personal funds ($100 × 10 seats at the table), and the remaining $9,000 can be paid from your DAF.
Ensuring compliance with IRS regulations and protecting our donors from IRS penalties is a a key part of the Catholic Foundation’s mission and services. We strive to maintain excellent and up-to-date knowledge of changes to the tax code and will continue to update our donors as these changes occur.
If you have any questions, please contact us at email@example.com or 248.204.0332.