Financial Services Industry
Industry: Email Alert RSS FeedDonor-Advised Fund Abuse Rankles IRS.
Bank Investment Consultant, March, 2007 by Glover, Hannah
The Internal Revenue Service is reportedly scrutinizing donor-advised funds for possible abuse by individual donors, sponsoring organizations, such as endowments, and even recipients. Donor-advised funds let an investor add money to an account, from which gifts are made to their charities-of-choice over time.
A donor may deduct the full amount of the initial contribution on his or her tax return. The Pension Protection Act of 2006 for the first time defined the funds in the tax code and also enforced fines and penalties for improper gifts. One of the IRS's concerns is that donors are using the funds as taxfree slush funds for personal expenses like tickets or travel. Another example of abuse could be if a recipient were to give preferential...
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