Is this no longer an issue with the IRS?We have a donor who made a 7 figure pledge personally and 3 months later we received a payment from the family foundation of the donor.The process that I thought we should follow was:
1) Reverse the Donor pledge
2) Re-enter the pledge as being from the Family Foundation3) Enter the payment.I discovered this transaction and mentioned to my VP that we needed to do a bit of gift entry training on flagging this kind of transaction and to follow the steps above and my VP thought that the IRS had changed it's perspective on this being an act of self-dealing (provided there were no tangible benefits associated with the original pledge).Has the IRS changed this perspective? I cannot find anything online that indicates that this is no longer the case.Thanks!Mark
So many Georgia folks on here. It's nice to see.
We had this discussion a little while back. The guidance from the IRS seems to be that Donor Advised Funds can pay pledges. Family Foundations weren't given the same treatment, though. I think what you're proposing is probably what a bunch of people are doing. A conservative approach is to do what you're doing for all third-party payments until the IRS really figures out what it wants to do.
Bill WongManager of Giving OperationsSavannah College of Art and Design ®
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Hi again, Mark.
You can read IRS Notice 2017-73 for yourself regarding DAFs, which weren't the point of you question. The "whole set of criteria" John refers to is just three pretty basic things.
· (1) the sponsoring organization makes no reference to the existence of a charitable pledge when making the DAF distribution; (Pretty self-explanatory)
· (2) no Donor/Advisor receives, directly or indirectly, any other benefit that is more than incidental (as discussed in this notice and as further defined in future proposed regulations) on account of the DAF distribution; and (The donor receives no benefit; the normal stuff we would claim has some value, and there are examples in the notice)
· (3) a Donor/Advisor does not attempt to claim a charitable contribution deduction under @ 170(a) with respect to the DAF distribution, even if the distributee charity erroneously sends the Donor/Advisor a written acknowledgment in accordance with @ 170(f)(8) with respect to the DAF distribution. (The donor doesn't try to take an improper tax deduction, even if we screw up and send them a letter saying their gift may be deductible)
DAFs will eventually catch up to this and change their boilerplate "can't be used to satisfy pledges" language. Probably not until the IRS codifies this guidance, though. Again, read the notice and come to your own conclusion.