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›: NPT Overview
›: Donor Advised Funds: Overview
›: Donor Advised Funds: Contributions
›: Donor Advised Funds: Tax Deductions
›: Supporting Organizations

NPT Overview

What is the National Philanthropic Trust?
An independent public charity, the National Philanthropic Trust helps individuals and families reach their philanthropic goals meaningfully and effectively. NPT administers the philanthropic efforts of donors throughout the United States who make grants to 501(c)(3) organizations. Most NPT donors' giving takes the form of donor advised funds. NPT is currently one of the 100 largest charitable institutions in the United States, having raised over $1.2 billion in charitable assets. Since our founding in 1996, we have distributed more than 22,500 grants totaling over $630 million to charities worldwide.

Donor Advised Funds: Overview

What is a donor advised fund?
A donor advised fund is a charitable giving vehicle administered through a public charity that pools donations with other donor’s gifts, invests them and makes grants to charitable organizations upon the recommendations of donors.

Donations to a donor advised fund earn an immediate federal income tax deduction for the entire gift. A donor then, recommends how the assets are to be invested, and on their own timetable, can recommend grants to charitable organizations. It is that simple-make the donation, take the tax deduction, benefit from tax-free growth, and recommend grants whenever. This eliminates the year-end pressure to select a charity and make a donation.

Who can be a donor?
Individuals, families, companies, foundations, and other entities can open a donor advised fund. The donor is the person(s) or company making the contribution(s) to the account. If the contributions are from joint ownership, then multiple donors can be listed. If the donor wants non-contributors to have rights to the account, they can name those individuals as account advisors.

What is an account advisor?
An account advisor is named by the donor to have access to recommending grants on the account during the donor's lifetime. In the event of the donor's death, advisors will become successors to the account. Usually a spouse or child of mature age is named as an advisor to the account.

What is a successor?
The donor identifies a successor to assume advising the account after the donor's death. Multiple successors can be named to an account. Depending on the donor's wishes, the account can be split equally amongst the successors or they can share the responsibilities. Successors can name successors to take over in the event of their death.

What is a beneficiary?
The beneficiary is a charitable organization(s) the donor names to receive the remaining assets of the donor-advised fund upon the death of all original donors.

Can an account be named after someone besides the donor?
Yes, the donor can choose any name for the donor advised fund account. However, many donors use a name that reflects the donor advised fund's main purpose such as The Smith Educational Fund.

Are commissions offered to financial advisors who recommend clients to the National Philanthropic Trust Donor Advised Fund?
No. Our mission is to encourage and increase philanthropy in the United States, and with our low-cost structure, we are able to pass more funds on to qualified charities. We believe that financial advisors will clearly identify the benefits of NPT's program over comparable donor advised funds, and recommend the Program to clients on those merits.

Can I play a role in managing the assets donated by my client?
You can recommend a strategy among our pre-approved investment pools at any time. NPT's investment committee selects the funds which comprise the investment pools, and our financial service partners manage the underlying funds in each pool.

What services are available on National Philanthropic Trust's website?
Account advisors who register for web access can:

View account balances and asset allocation among investment pools.
Make grant recommendations.
Check the status of a recent gift or grant recommendation.
View recent account statements.
View account-related information such as addresses, and submit changes to this information.
Review previous contributions and grants.
Find information on specific charities.
Download or order forms and literature.

Can a client's children be involved in the donor-advised fund established with the NPT Donor Advised Fund?
Children (18 years or older) can be named as account advisors during the donor's lifetime, and successor-advisors can be any age. Account advisors can recommend grants to charities, and request exchanges among investment pools. Successor-advisors receive the same privileges upon becoming account advisors (after the death or legal incapacity of the last remaining advisor).

What is the minimum amount that can be granted to a charity?
The minimum amount that can be granted is $250.

Can an account advisor personally deliver a grant check to a charity?
No. However, the letter that accompanies the check will acknowledge the account advisor and program account name (unless anonymity is requested).

Can NPT Donor Advised Fund accounts be connected with other brokerage services?
No. However, online account statements are available from NPT and you can consolidate the information for your client if you wish.

For more information, please visit our Donor FAQs, which answers additional questions about the NPT Donor Advised Fund.

Donor Advised Funds: Contributions

What is the minimum contribution to open a donor advised fund?
You can open a donor advised fund with a minimum gift of $25,000. Subsequent contributions must be at least $5,000.

What types of assets can my client contribute?
NPT accepts the widest range of assets of any charitable organization including:

Cash
Publicly traded securities including stocks, bonds, mutual fund shares
Restricted and controlled stock
Privately-held stock
Real estate
Proceeds from life insurance; or from a fully-paid policy
Transfers and grants from private foundations
Bequests from wills
Named beneficiary of charitable remainder trust
Named beneficiary of an IRA, 401(k) or other retirement account
Tangible personal property
And more

Refer to How to Make New or Additional Contributions (PDF) or call one our professionals toll-free at 1-888-878-7900 for assistance in determining the process and procedures for contributing.

Can a donor transfer assets from another donor advised fund?
Yes, most donor advised fund programs allow a donor to switch his or her account to a different program. The donor simply recommends a grant to the National Philanthropic Trust from their existing donor advised fund account. When NPT receives the grant it will be deposited into the donor's account. This is not a taxable event because the donor has already received a tax deduction for the original contribution to a donor-advised fund.

When is a contribution considered a charitable donation?
A contribution is complete when the asset is "out of the donor's control." The time frame varies depending on the type of asset and when it is transferred to the account. Please contact NPT for more information.

How quickly are contributions processed?
Publicly traded stocks are usually liquidated on the same or next market day after NPT receives them. After cash contributions and securities are liquidated, we invest them as quickly as possible into the investment strategy the donor has recommended.

What is the last day this year that I can still make a contribution to receive the tax benefit?
For cash and securities, the donor must be able to demonstrate that the contribution left his or her possession as an irrevocable transfer to NPT before the end of the calendar year.

Can the donor contribute foreign stocks?
Yes, if they are traded on domestic stock exchanges. In case they are not, please contact NPT prior to the donation.

Where does the income from the investment vehicles go?
Income in the donor advised fund account grows tax-free. Income from the investment vehicles is reinvested in the donor advised fund account which may potentially increase the value of the account. The income is not tax-deductible, only the original contributions to the account are deductible.

Donor Advised Funds: Tax Deductions

Our 2007 NPT Program Guide (PDF) is a good reference for detailed tax questions. This section addresses only federal taxes. Rules and regulations regarding tax deductions for charitable giving vary at the state level. In addition, certain additional rules or limitations may apply with respect to your tax treatment depending on your specific circumstances. Please consult with your tax advisor.

What are the limitations on charitable deductions?
Under the Internal Revenue Code, deductions for charitable contributions are subject to certain "percentage limitations" that limit the deductions that can be taken to a stated percentage of adjusted gross income ("AGI") in the year the deduction is taken. Contributions in excess of these percentage limitations may be carried forward up to five subsequent years. Because National Philanthropic Trust is a public charity, the percentage limitations that apply are generally the most favorable charitable deductions available under IRS regulations.

Deductions for contributions of long-term capital gain property (such as appreciated securities held for more than one year) are limited to 30% of AGI.
Deductions for all other contributions (including contributions of cash) may be taken up to 50% of AGI.
Your ability to take itemized deductions may be subject to certain other limitations. Please contact your tax advisor to determine your tax deductibility limits.

How is a gift of publicly traded, appreciated securities valued for charitable deduction purposes?
Such a gift, held for over a year, may be deducted for income tax purposes at their fair market value. The value is determined to be the mean of the high and low on the date the contribution is made to NPT. The net amount is credited to your fund but this amount most likely will vary from the amount you can take as a charitable deduction. This difference is due to market fluctuations and liquidation costs. You should consult with your tax advisor to determine your final tax deductability.

Does the donor file the contribution receipt with their taxes at the end of the year?
The donor will receive a Form 8283 to file with their tax statement at the end of the year. It is important however, that the donor verifies the documentation on the form since they will be held liable for incorrect information. Donors should also consult with their tax advisor.

What are the liquidation costs?
Liquidation costs depend on the type of security that is donated. For publicly traded securities, NPT's costs are comparable to an institutional trade. For other types of assets liquidation and appraisal costs could be higher.

For more information, please visit our Donor FAQs, which answers additional questions about the NPT Donor Advised Fund.

Supporting Organizations

I have heard about "supporting organizations" - how are they different from private foundations?
A Supporting Organization (SO), also known as a Supporting Foundation, is a philanthropic vehicle created under the umbrella of existing public charity or charities such as the National Philanthropic Trust. It is a public charity that must be closely tied to at least one other public charity.

SOs are similar to private foundations in that they can be created and funded by a single individual or family, have a board of directors. However, SOs enjoy public charity status because they actively function in a supporting relationship to one or more other public charities, and the SO needs to have a compatible mission with the other charity/charities which it is associated. By contrast, private foundations can make grants to any public charity or carry out other direct charitable activities themselves. Unlike a private foundation, the donor cannot ultimately control a supporting organization.

There are three basic types of supporting organizations (NPT only works with Type 1 Supporting Organizations), and each option reserves a varying degree of the supporting organization's governance for the trustees of the beneficiary charity. Because of the complex nature of supporting organizations, it is important that you consult a professional advisor for further information and guidance.

View our Comparing a Supporting Organization vs. Private Foundation for more details.

What is the minimum contribution to establish a Supporting Organization?
The minimum to open an SO with NPT is $10 million.

Can I contributed closely-held/privately-held stock to a Supporting Organization?
For owners of a closely-held business, the exemption from the excess business holdings tax Section 4943 has been an important incentive to establishing a SO. That tax requires a private foundation to dispose its interest in a corporation if more than 20% of the corporation's voting stock is owned by a combination of the private foundation, the donor, the donor's family and the donor's business. This poses a serious problem to many estate plans.

By comparison, there have been a series of IRS rulings that have exempted supporting organizations from this tax. Some rulings have permitted private foundations to convert to supporting organization status to avoid the tax. The IRS even authorized one private foundation to make a charitable grant to a supporting organization of sufficient stock to bring the private foundation's holdings below the authorized limit. The IRS will also permit the tax to be avoided by a grant to a philanthropic fund of a community foundation.

What are the benefits of starting a supporting organization versus a private foundation?
There are many advantages to becoming a supporting organization of National Philanthropic Trust versus setting up a private foundation:

Active Role for the Donor: The donor can maintain active participation in the management of the Supporting Organization.
Public Charity Status: Public charity status provides favorable tax benefits that are unavailable to private foundations.
Maximum Tax Benefits: Contributions of cash to the organization are deductible at the maximum rate (up to 50%) rather than the limited rate (30%). For contributions of publicly-traded or closely-held stock, the deduction is at the full fair market value rather than the donor's cost basis.
No Excise Taxes: SOs are not subject to the 2% annual excise tax on the organization's net investment income.
No Payout Requirement: SOs are not required to comply with the 5% payout requirement for grants and distributions.
Lower Costs: An SO can achieve cost savings through its access to NPT's professional staff, state-of-the-art technology, accounting systems, and directors and officer's liability insurance.

Can I manage the investments in the Supporting Organization?
Yes, provided the investment strategy you propose complies with the Investment Guidelines of National Philanthropic Trust, and is approved by our Board of Trustees. Because of NPT flexibility and expertise, we can accommodate a wide-range of investments, including alternative investments. Please contact NPT for more details toll-free at 1-888-878-7900.