CAP Philanthropic Vehicles & Structures Flashcards

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

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

A Private Operating Foundation directly conducts its own charitable programs (like a museum or research institute) rather than primarily grantmaking, and can receive more favorable treatment for contributions from private foundations.

Which IRS form must a private foundation file annually?

Answer: Form 990-PF

Private foundations must file Form 990-PF annually, which discloses financial data, investment assets, grants made, and officer compensation, and is publicly available.

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?

Answer: Charitable Lead Annuity Trust (CLAT)

A CLAT pays fixed annuity amounts to charity for a defined term, after which the remaining principal passes to designated heirs such as grandchildren.

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

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

The Pension Protection Act of 2006 requires that donated clothing and household items be in 'good used condition or better' to qualify for a charitable deduction.

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?

Answer: 50% of AGI

Contributions of long-term capital gain property (appreciated stock) to a public charity or DAF are deductible up to 30% of AGI, with five-year carryforward for excess amounts.

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

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

Community foundations must ensure DAF grant recommendations do not result in more than incidental personal benefit to the donor, as such grants could constitute impermissible private benefit.