900 Bestgate Road
Suite 400
Annapolis, MD 21401
410.280.1102
2.5.20
Due Diligence Process for Donor Advised Funds Grant Recommendations
The Community Foundation of Anne Arundel County (CFAAC) conducts a thorough Due Diligence Process for every grant recommendation made by a fund advisor of a Donor Advised Fund held at the community foundation in order to be compliant with all laws governing the use of funds held through community foundations. CFAAC diligently complies with all IRS laws regarding the gifts received into, and grant made out of, Donor Advised Funds. If a grant recommendation is not legally compliant, a member of the CFAAC staff will contact the donor as soon as possible so that the donor can make other arrangements for fulfilling their gift directly.
Grant recommendations made from Donor Advised Funds may not be used:
- as a payment on a pledge
- to make a grant to an individual
- to sponsor an event where the donor receives tickets to be used personally, or by their family, friends or business associates
- or any other restrictions as defined by your Donor Advised Fund Agreement
A few common questions answered:
- Grants can be made only to 501(c)3 organizations that are registered with the state charitable organization’s division and must be in good standing with the Department of Assessment & Taxation. Some grants may require additional research.
- Grant recommendations made from Donor Advised Funds may not be used as a payment on a pledge or to make a grant to a specific individual. Donor Advisers and/or family members may not receive any benefit in return for a grant from their Donor Advised Fund (DAF).
- Grants to support a fundraising event or campaign are only permitted to be funded through DAFs if no benefits, event tickets, goods, or services are received by the donor-adviser, his/her family or his/her business(es).
- There are specific rules governing gifts made from DAFs to scholarship funds. Please check with CFAAC for guidance on making a grant recommendation to a scholarship fund. Grants made to support a scholarship or fellowship for a named individual are not legally permitted.
- IRA Charitable Rollovers are not legally eligible to be gifted into an individual's DAF. However, these distributions can be made directly to CFAAC to support a variety of other funds held at the community foundation. Regular IRA distributions including Required Minimum Distributions (RMD) may be gifted to an individual’s DAF but will be subject to income tax, and thus deductible as a charitable donation. Please refer to the Pension Protection Act of 2006, as amended and the Protecting Americans from Tax Hikes (PATH) Act of 2015 for more information.
- All approved grant checks will be mailed directly to the 501c3 organization receiving the grant and cannot be mailed or hand-delivered to the donor.
For questions, contact grants@cfaac.org.