Detail questions when entering Stock donations

[shak0000]

Do I need to check any of the following statements when entering stock donation to a DAF (Donor advised fund) such as Fidelity or Scwab Charitable considering I make grant recommendations?

1) "I retained partial ownership on a donation"

2) "I attached conditions on a donation"

Best regards.

[maglib]

@shak0000  if you donated stock with no requirements which allows charity to sell it at will then response is no.

If they have no ability to sell or any other criteria to the donation, then yes.

[shak0000]

Exactly the question.  Does donating to DAF inherently impose any conditions or restrictions and how should it be entered in TTax?

I'm hoping others familiar with DAF can chime in.

[JanAug]

@maglib's answer is correct. Retired CPA here, also had a very standard DAF with a local community foundation for a number of years.  The initial donation of either cash or of stock which will immediately be turned into cash by the charity, is not normally characterized as a restricted donation, because grant recommendations are legally just that:  "recommendations".  

[maglib · Accepted solution]

@shak0000   is the DAF on the approved list of 501C3 organizations?  Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account. you have no ownership of the donation upon donating it; were there any questionable conditions made or required upon the donation or does the DAF now have control over those assets and your input is just a suggestion that can be legally ignored is the correct question here?

The IRS is aware of a number of organizations that appeared to have abused the basic concepts underlying donor-advised funds. These organizations, promoted as donor-advised funds, appear to be established for the purpose of generating questionable charitable deductions, and providing impermissible economic benefits to donors and their families (including tax-sheltered investment income for the donors) and management fees for promoters. So if you think your donation may not qualify you need to research further if the DAF was legitimate and qualified:

Because grants to a Type III non-functionally integrated supporting organization are subject to more restrictive rules, private foundations and donor-advised funds interested in making grants to supporting organizations need to know whether the supporting organization is a Type III non-functionally integrated supporting organization).

In determining the classification (including Type of supporting organization) of a public charity, a foundation or sponsoring organization generally may rely on:

Information about the organization provided in Tax Exempt Organization Searchhttps://www.irs.gov/charities-non-profits/tax-exempt-organization-search ;
Information from the IRS Business Master File (“BMF”) downloaded from the IRS website https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf or obtained from a third party, if certain requirements are met (see section 4 of Revenue Procedure 2011-33) https://www.irs.gov/irb/2011-25_IRB#RP-2011-33 ; or
The grantee’s current IRS letter recognizing the organization as tax-exempt and indicating its public charity classification.
However, a grantor may not rely on such information to the extent that:

The IRS has provided public notice that the organization’s status has changed; or
The grantor had knowledge of the change of status prior to such publication, or was in part responsible for, or was aware of, the act or the failure to act that gave rise to such change of status.

Examinations of these arrangements may result in the following Service actions in appropriate cases:

disallow deductions for charitable contributions under Internal Revenue Code section 170 for payments to the fund;
impose section 4966 excise taxes on sponsoring organizations and managers of donor-advised funds;
impose section 4958 excise taxes on donors or managers of donor advised funds; and/or (d) deny or revoke the charity's 501(c)(3) exemption.

Donor-advised funds are subject to new requirements under the Pension Protection Act of 2006. The IRS has issued guidance and new procedures implementing the legislation.

New excise taxesPDF may apply to sponsoring organizations and managers of donor-advised funds.
Thus, transactions between sponsoring organizations and fund managers may be subject to intermediate sanctions excise taxes and donor-advised funds may be subject to taxes on excess business holdings.
Donors are provided guidance on how to determine whether a grantee that is a donor-advised fund is a public charity under section 509(a)(1), (2), or (3), in IRS Business Master File information.
Notice 2006-109 provides interim guidance on issues affecting supporting organizations and sponsoring organizations of donor advised funds.
Responding to Congressional direction, Treasury Department reported the results of a study of donor-advised funds and supporting organizations in December 2011.