CAP CAP Philanthropic Vehicles & Structures 3

Question 1

What is a Private Operating Foundation and how does it differ from a standard private foundation?

Accepted Answer

It directly operates its own charitable programs rather than primarily making grants, and may have relaxed distribution rules

Answer

It makes grants to other charities rather than operating its own programs

Answer

It is exempt from the 5% distribution requirement entirely

Answer

It is a hybrid between a public charity and a private foundation with no excise taxes

Question 2

Which IRS form must a private foundation file annually?

Accepted Answer

Form 990-PF

Answer

Form 990

Answer

Form 990-EZ

Answer

Form 1041

Question 3

A philanthropic advisor is structuring a gift where the charity receives annual payments first for 20 years and then assets pass to the donor's grandchildren. This describes which vehicle?

Accepted Answer

Charitable Lead Annuity Trust (CLAT)

Answer

Charitable Remainder Annuity Trust

Answer

Grantor Retained Annuity Trust

Answer

Pooled Income Fund

Question 4

Under the Pension Protection Act of 2006, what change was made to the rules for clothing and household items donated to charity?

Accepted Answer

Donated clothing and household items must be in good used condition or better to qualify for a deduction

Answer

All such donations now require a written appraisal regardless of value

Answer

The deduction for used clothing was eliminated entirely

Answer

Donors must receive a Form 1099 from the charity for all such donations

Question 5

A donor contributes $1 million in publicly traded stock to a Donor Advised Fund. What is the charitable deduction limit as a percentage of adjusted gross income (AGI) for this gift?

Accepted Answer

50% of AGI

Answer

20% of AGI

Answer

30% of AGI

Answer

60% of AGI

Question 6

Which of the following is a primary compliance concern for community foundations managing Donor Advised Funds?

Accepted Answer

Preventing donors from recommending grants that result in more than incidental benefit to the donor

Answer

Ensuring donors receive goods or services in exchange for DAF contributions

Answer

Requiring all DAF assets to be invested in government bonds

Answer

Limiting grant recommendations to organizations in the same state as the community foundation