CAP CAP Philanthropic Vehicles & Structures

Question 1

A Donor Advised Fund (DAF) is best described as:

Accepted Answer

A charitable giving account sponsored by a public charity where donors recommend grants

Answer

A private foundation that operates its own charitable programs

Answer

A trust that pays income to the donor for life before transferring to charity

Answer

A pooled investment vehicle exclusively for endowment purposes

Question 2

Which of the following is a key regulatory distinction between a public charity and a private foundation under U.S. tax law?

Accepted Answer

Private foundations must distribute at least 5% of assets annually; public charities have no such requirement

Answer

Public charities pay a 1.39% excise tax on investment income; private foundations do not

Answer

Private foundations can accept anonymous donations; public charities cannot

Answer

Public charities must register with the SEC; private foundations register only with the IRS

Question 3

A Supporting Organization (SO) is a type of public charity. What is its defining characteristic?

Accepted Answer

It is organized and operated exclusively to support one or more specified public charities

Answer

It operates independently with no relationship to other nonprofits

Answer

It qualifies as a private foundation but elects public charity status

Answer

It must have a majority of board members appointed by government entities

Question 4

What is a Charitable Gift Annuity (CGA) and who typically issues them?

Accepted Answer

A contract between a donor and a charity where the donor transfers assets and receives fixed income for life

Answer

An annuity product issued by insurance companies with charitable tax benefits

Answer

A government-sponsored retirement vehicle with charitable components

Answer

A type of mutual fund that donates a percentage of gains to charity

Question 5

Which philanthropic vehicle allows multiple donors to pool contributions, benefit from professional investment management, and receive a pro-rata share of income while supporting charity?

Accepted Answer

Pooled Income Fund

Answer

Donor Advised Fund

Answer

Charitable Lead Trust

Answer

Supporting Organization

Question 6

Under IRS rules, a private foundation engaging in a transaction that benefits a 'disqualified person' may face what consequence?

Accepted Answer

Excise taxes on self-dealing transactions under IRC Section 4941

Answer

Loss of 501(c)(3) status immediately

Answer

Conversion to a public charity status automatically

Answer

Criminal prosecution of board members