CAP CAP Philanthropic Vehicles & Structures 2

Question 1

A donor wants to establish a permanent endowment that generates annual grants to community nonprofits. Which vehicle is most appropriate?

Accepted Answer

Donor Advised Fund at a community foundation

Answer

A DAF at a community foundation is ideal for creating a permanent endowment-like structure that generates ongoing grant recommendations to local nonprofits.

Question 2

What distinguishes a Charitable Remainder Unitrust (CRUT) from a Charitable Remainder Annuity Trust (CRAT)?

Accepted Answer

A CRUT pays a fixed percentage of annually revalued assets; a CRAT pays a fixed dollar amount

Answer

A CRUT pays a fixed percentage of the trust's annually revalued assets (so income fluctuates), while a CRAT pays a fixed dollar annuity regardless of trust performance.

Question 3

A private foundation that converts to a public charity status to avoid private foundation rules is known as a:

Accepted Answer

Terminating Foundation

Answer

A private foundation can terminate its status by distributing all assets to public charities or by converting to a public charity, a process called foundation termination.

Question 4

Which of the following is an advantage of a Donor Advised Fund over a private foundation for most donors?

Accepted Answer

DAFs have no minimum distribution requirements; private foundations must distribute 5% annually

Answer

DAFs do not have mandatory annual distribution requirements, giving donors flexibility on timing, while private foundations must distribute at least 5% of assets annually.

Question 5

Under the SECURE Act 2.0, what is the maximum annual amount a donor aged 70½ or older can transfer directly from an IRA to a charity via a Qualified Charitable Distribution (QCD)?

Accepted Answer

$105,000

Answer

Under SECURE Act 2.0, the QCD limit is indexed for inflation; for 2024, it is $105,000 per individual, up from the previous $100,000 cap.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP CAP Philanthropic Vehicles & Structures 2