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 DAF is a charitable giving account held by a sponsoring public charity; donors make irrevocable contributions, receive an immediate tax deduction, and recommend grants over time.

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

Private foundations are required to distribute at least 5% of the fair market value of their investment assets annually for charitable purposes, while public charities are not subject to this mandatory payout rule.

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

A Supporting Organization is a 501(c)(3) public charity that maintains a formal relationship with and supports one or more specified public charities, qualifying it for public charity status.

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

A CGA is a contract between a donor and a nonprofit charity; the donor transfers assets in exchange for fixed lifetime income payments, with the remainder benefiting the 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

A Pooled Income Fund combines contributions from multiple donors into a single fund managed by the charity; each donor receives income proportional to their share until death, when the remainder goes to charity.

(CAP) Certified Philanthropic Advisor Practice Test

(CAP) Certified Philanthropic Advisor Practice Test

CAP CAP Philanthropic Vehicles & Structures