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›: Donor Advised Funds: Overview
›: Donor Advised Funds: Account Opening
›: Donor Advised Funds: Contributions
›: Donor Advised Funds: Tax Deductions
›: Donor Advised Funds: Advantages
›: Donor Advised Funds: Grant Recommendations
›: Donor Advised Funds: Fees and Expenses
›: Donor Advised Funds: Investment Options
›: Donor Advised Funds: Policies and Procedures
›: Supporting Organizations

Donor Advised Funds: Overview

What is a donor advised fund?
A donor advised fund (DAF) is a charitable giving vehicle that allows an individual, family or corporation to make an irrevocable, tax-deductible contribution of personal assets to National Philanthropic Trust, and at any time thereafter recommend grant distributions from that account to qualified charitable organizations. NPT pools donations with other donors' contributions, invests them according to the donors' investment selection, and makes grants to qualified charitable organizations based upon the recommendations of donors.

How do I establish a donor advised fund?
By completing our Donor Application and returning it via mail or fax to our office. You can get started right now:

Open Online: fill out our fast and convenient online form.

Open by Mail or Fax: download a Donor Application Form (PDF) and if you are contributing securities a completed Delivery Instructions for Securities and/or Letter of Authorization (PDF) and submit by fax or mail.

Any questions: call us toll-free at 1-888-878-7900.

What should I read before opening an account?
Read our Donor Advised Fund NPT Program Guide (PDF) for a review of our policies and procedures. You will be required to agree to these policies upon signing the account application.

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 should name those individuals as account advisors.

What is an account advisor?
An account advisor is named by the donor to recommend grants on the account. An account advisor is usually a spouse, child, relative or friend.

What is a successor?
The successor is the person identified by the donor to take over advising the account after the donor's death. Multiple successors can be named to an account and, depending on the donor's wishes, the account can be split equally among the successors, or they can share the responsibilities. Successors can also name successors to take over in the event of their own death.

Can an account be named after someone besides the donor?
Yes, the donor can choose any name for the account. Most donors choose a name that reflects the donor's name and/or the main purpose of the account such as "The Smith Educational Fund." Notably, each grant has the ability to be recognized by either donor name, account name, anonymously or by special acknowledgement (for example, in memory of or in honor of).

How quickly can I set up a donor advised fund?
Immediately. Once you have completed a donor advised application and send it to NPT, your fund will be established and ready to receive your contribution.

Can I choose a successor advisor to my fund?
Yes. You may designate one or more family members or representatives to succeed you in recommending charitable grants from your fund.

How can I get my children involved?
If they are of legal age, you can designate them as additional grant advisers to your donor advised fund, or name them as successors to the account.

What happens to my fund if there are no successors?
You can designate one or more charitable organizations as the account beneficiaries. If you do not name successors or charitable beneficiaries the remaining balance will be transferred to the NPT Giving Fund.

How often will I receive statements?
You will receive a quarterly statement from NPT including a summary of a fund's status, investment performance, a record of contributions to the fund, and a record of grants.

Donor Advised Funds: Account Opening

What is a donor advised fund?
A donor advised fund (DAF) is a charitable giving vehicle wherein an individual, family or corporation makes an irrevocable, tax-deductible contribution of personal assets to National Philanthropic Trust, and at any time thereafter can recommend grant distributions from that account to qualified charitable organizations. NPT's pools donations with other donors' contributions, invests them according to the donors' investment selection, and makes grants to qualified charitable organizations based upon the recommendations of donors.

How do I establish a donor advised fund?
By completing our Donor Application and returning it via mail or fax to our office. You can get started right now:

Open Online: fill out our fast and convenient online form.

Open by Mail or Fax: download a Donor Application Form (PDF) and if you are contributing securities a completed Delivery Instructions for Securities and/or Letter of Authorization (PDF) or and submit by fax or mail.

Any questions: call us toll-free at 1-888-878-7900.

What should I read before opening an account?
Read our Donor Advised Fund NPT Program Guide (PDF) for a review of our policies and procedures. You will be required to agree to these policies upon signing the account application.

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 should name those individuals as account advisors.

What is an account advisor?
An account advisor is named by the donor to recommend grants on the account. An account advisor is usually a spouse, child, relative or friend.

What is a successor?
The successor is the person identified by the donor to take over the account after the donor's death. Multiple successors can be named to an account and, depending on the donor's wishes, the account can be split equally among the successors, or they can share the responsibilities. Successors can name successors to take over in the event of their own death.

Can an account be named after someone besides the donor?
Yes, the donor can choose any name for the account. However, we recommend the name reflect the donor's name and/or the main purpose of the account such as "The Smith Educational Fund." Notably, each grant has the ability to be recognized by either donor name, account name, anonymously or by special acknowledgement (for example, in memory of or in honor of).

How quickly can I set up a donor advised fund?
Immediately. Once you have completed a donor advised application and send it to NPT, your fund will be established and ready to receive your contribution.

Can I choose a successor advisor to my fund?
Yes. You may designate one or more family members or representatives to succeed you in recommending charitable grants from your fund.

How can I get my children involved?
If they are of legal age, you can designate them as additional grant advisers to your donor advised fund, or name them as successors to the account.

What happens to my fund if there are no successors?
You can designate one or more charitable organizations as the account beneficiaries. If you do not name successors or charitable beneficiaries the remaining balance will be transferred to the NPT Giving Fund.

How often will I receive statements?
You will receive a quarterly statement from NPT including a summary of a fund's status, investment performance, a record of contributions to the fund, and a record of grants.

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.

Will the NPT send me a receipt for my contribution?
Yes. Generally, within 10 business days of receiving your gift, NPT will provide written confirmation of your contribution. This confirmation will serve as your receipt for tax purposes. Please note since you are eligible for a tax deduction at the time you make your contribution to NPT, any other receipts you may receive (e.g., from a public charity to which you recommended a grant) are duplicative and cannot be used for tax purposes.

How often can I add to a fund?
As often as you would like. You may add to the fund at any time with a gift of $5,000 or more. Some donors like to add to their accounts immediately after recommending grants. Others make regular contributions to build up the account for future grantmaking. The flexibility of a donor advised fund lets you determine your giving timetable.

Are additional contributions to the NPT Donor Advised Fund tax-deductible?
Yes. You will be eligible for a federal income tax deduction for a charitable contribution on the date the contribution is made to NPT. This is subject to the deductibility limitations set by law. Please consult your legal or tax advisor to review your personal situation. Please note that since you are eligible for a tax deduction at the time you make your contribution to NPT, any other receipts you may receive (e.g., from a public charity to which you recommended a grant) are duplicative and cannot be used for tax purposes.

What types of assets can I 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 full-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

Please call one our professionals toll-free at 1-888-878-7900 for assistance in contributing different asset types.

Can I contribute assets from my IRA?
You may designate the National Philanthropic Trust and your donor advised fund as a charitable beneficiary for all or a part of your IRA. Under current law, you cannot make contributions directly from your IRA to a donor advised fund during your lifetime. The rules covering such gifts are very specific so NPT suggests that you contact your tax adviser.

Can I contribute foreign stocks?
Yes, if they're traded on domestic stock exchanges. If they're not, please contact NPT prior to making the donation.

What type of asset is best to contribute?
Appreciated securities that have been held for more than one year make the most cost effective contributions. You avoid the capital gains tax on the securities and can deduct the total fair market value of the contribution from your income taxes, up to 30% of adjusted gross income. Because of these advantages, you are able to effectively give more to the causes you support.

When is a contribution considered a charitable donation?
A contribution is complete when the asset is "out of the donor's control." Different assets can use different date criteria. The time frame varies depending on the type of asset and when it's 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 into the strategy you have selected as quickly as possible.

What are the liquidation costs?
Liquidation costs depend on the type of security you donate. For publicly traded securities, liquidation costs are comparable to an institutional trade. For other types of assets, liquidation and appraisal costs could be higher.

What types of fees are charged?
Each donor advised fund account is subject to an administration fee, which is paid to NPT. This fee covers NPT's operating expenses such as grant making, recordkeeping, annual audits, tax filing, quarterly statements, insurance and other legal and fiscal responsibilities. This blended fee schedule will be applied against the average daily balance in your account at the end of each month. Investment fees are also charged, which vary according to the investment strategy selected. Please consult our NPT Program Guide (PDF) for a current fee schedule.

Why contribute to NPT's donor advised fund rather than directly to a charity?
A donor advised fund provides a number of benefits that direct donations to a charity may not, including:

Ability to accept a wide range of assets
Not all charities accept or have the knowledge or capacity to accepts gifts of stock and other appreciated assts. Your donor advised fund provides you the maximum deduction allowed by law, and NPT has the expertise to accept the widest range of assets of any charitable organization.
Donate now, decide later
You recommend grants to charity on your own timetable so there is no fiscal year-end pressure to select one or more charities to support.
The ability to give more over time
You recommend the investment strategy for your contributions to your donor advised fund by selecting from one of the professionally managed investment vehicles offered. Any potential growth in assets is tax-free which provides the potential for greater charitable gifts.
Simplicity
A donor advised fund account provides consolidated reporting and record keeping. You can make multiple grants to multiple charities and you will need only one tax substantiation letter (for each contribution to the account). You avoid the extensive paperwork.
Leave a legacy
Your entire family can be directly involved in grant making and investing, and by designating successors to your account, your donor advised fund can establish an enduring family legacy for generations.

Donor Advised Funds: Tax Deductions

Our 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.

Why do donors get to take a tax deduction for the full amount of their fund when they haven't distributed the entire amount to charities?
NPT is a 501(c)(3) public charity, and the initial gift qualifies as your charitable contribution. Especially at the end of the year, donors appreciate the fact that they can donate now, receive their tax deduction, and decide later which charities they would like to support.

When do I receive my tax deduction?
You are eligible for an itemized deduction on the date you make a charitable contribution to NPT. This is subject to the general limitations described in "What are the limitations on charitable deductions?", below. Your deduction will largely depend, in part, on the type of asset that you contribute. Deduction amounts follow:

Check/wire: Your deduction is for the amount of your cash contribution.
Publicly traded securities: For publicly traded securities held for more than one year, your deduction will be the fair market value of the securities.
Securities that are not publicly traded: For securities not publicly traded that have been held for more than one year, your deduction will be the fair market value determined by you in a reasonable manner on the date the contribution is made. The IRS will require you to obtain a qualified independent appraisal in certain circumstances.
Real Estate: For contributions of real estate, your deduction will be the fair market value determined by you in a reasonable manner on the date the contribution is made. The IRS will require you to obtain a qualified independent appraisal in certain circumstances.

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 used for 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?
If you have held your appreciated securities for a year or more, you can deduct them at their fair market value. The value is determined using the mean value of the high and low on the date the contribution leaves the donor's control -- which is usually the date NPT receives it. 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 deduction.

Do I file the contribution receipt with my taxes at the end of the year?
You will receive a Form 8283 to file with your tax statement at the end of the year. It's important, however, that you verify the documentation on the form since you are liable for incorrect information.

How are capital gains treated for gifts of appreciated securities?
Since NPT is tax-exempt charity, we pay no capital gain tax when we sell the securities. They are eliminated for you, and you pay no capital gains tax.

Is the income earned in my NPT donor advised fund account considered an additional charitable donation for tax purposes?
Income from the investment strategies is reinvested and may potentially increase the value of the account. However, the income accrued inside your donor advised fund account is not tax deductible—only your original contribution to your account are deductible.

Donor Advised Funds: Advantages

What advantage does NPT hold over the other national nonprofits offering donor advised funds?
NPT offers donors personalized service. At NPT, donors can call on seasoned staff members with more than 90 years experience working with advisors, families, and individuals. We accept unusual assets, including real estate, art, and insurance. NPT also has the expertise to facilitate grants directly to foreign charities.

What are the tax advantages of establishing a fund at National Philanthropic Trust?
Donors who contribute stock and other appreciated assets are eligible for tax deductions, and they avoid capital gains tax. Also, there are many ways a donor advised fund may help a donor reduce estate taxes, preserve retirement assets for family members and provide gifts for charity. NPT's professional staff works closely with attorneys, accountants and other advisors to help donors make the best choices for their families.

What is the advantage of establishing a donor advised fund at NPT rather than a community foundation?
Some community foundations often limit all or a portion of their donors' grant-making opportunities to a region, meaning donors may not give contributions to charities outside their own areas. NPT allows grants to be made to nonprofit organizations in all 50 states. Family members who live in multiple locations and with charitable interests in different areas of the country particularly appreciate our national status. Compared to community foundations, NPT typically approves grants more frequently (weekly vs. monthly). NPT also allows donors to grant both income and principal, versus only allowing grants from income as in many community foundations. Donors to NPT are allowed to have their donor advised funds last in perpetuity, whereas many community foundations limit the number of generations that can succeed the original donor – often just a single generation.

What is the advantage of establishing a donor advised fund rather than giving a large contribution to a charity?
Through your gift to an NPT donor advised fund, you can take a large gift or single asset and break it into smaller gifts to as many charities as you would like. You also might find a donor advised fund especially advantageous for gifts of stock or complicated assets, which many charities don't have the resources to handle as expertly as NPT. By using stock to establish your donor advised fund, you avoid capital gains taxes, making more available for philanthropy. A donor advised fund also allows you to receive the tax benefits when you need them but develop your philanthropy over time as your interests change. In addition, your fund can be an excellent vehicle for developing your children's interest in philanthropy.

What is the difference between a donor advised fund and starting my own foundation?
Starting a private foundation can involve substantial start-up costs and administrative expenses, such as the yearly filing of a Form 990-PF. But one of the most important differences is that National Philanthropic Trust receives more favorable tax treatment than a private foundation. Donor advised funds allow donors to take an income tax deduction up to 50% of adjusted gross income (AGI) for cash donations and up to 30% of AGI for appreciated securities; versus 30% for cash donations and 20% for appreciated securities, respectively, for a private foundation. Donor-advised funds also offer the ability to recommend grants anonymously, if so desired. View our Comparing a Donor Advised Fund vs. Private Foundation for more details.

I know the government requires private foundations to distribute five percent of their assets each year. Does the same requirement cover donor advised funds?
No. NPT has no such requirement on donor advised funds. However, we do encourage donors to contribute 5% to charities and causes that are important to them. If you make no grant recommendation from your fund for three years, we'll call to see if we can help.

Donor Advised Funds: Grant Recommendations

What charities and nonprofits can grants be made to?
Grants can be made to charitable organizations that are tax exempt under Internal Revenue Code (IRC) Section 501(c)(3) and public charities under IRS Section 509(a). Grants can be made to private operating foundations but cannot be made to private non-operating foundations.

Can donations be made to foreign organizations?
Yes, NPT can make grant worldwide. Due to additional administrative costs an fee is charged to process international grant requests. Please contact us toll-free at 1-888-878-7900 for our fee schedule.

What is the minimum amount I can recommend as a grant?
$250.

How quickly are grants processed?
Grants are processed weekly, and twice a week between November 15 and January 15.

How many grants can be made in a year?
There is no limit to the number of grants made out of an account.

Is a fee charged for each grant I recommend?
No fees are charged for recommending grants.

How do I make a grant?
You can recommend a grant from your donor advised to a qualified charity either online or by filling out a grant recommendation form and faxing or mailing it to NPT.

Are there limitations on grants?
NPT cannot approve grants to individuals, or that satisfy a pre-existing pledge, or to political candidates or parties, or are used for any personal benefit, such as tuition, dues, membership fees, or goods purchased at a charitable auction.

May I recommend a grant to pay a pledge I have made to an organization?
No. When you make a contribution to a donor-advised fund NPT you are entitled to take the full amount as a tax deduction. This is because you have received nothing (in excess of purely incidental benefits) in return for your contribution. If NPT satisfies your pledge, you will be receiving something in return for your contribution – release of an obligation. Therefore, a donor may not use grants from a donor advised fund to satisfy a previously committed personal pledge made to a charity.

Can I recommend a grant from my donor advised fund to a charity and then attend the charity's event?
One of the most frequently asked questions about granting from a donor advised fund involves grants that involve a private benefit, good or service to the donor. NPT does not make grants to a charity when the grant funding will be used to supply a good or service back to the donor, such as but not limited to, food and beverages, gifts, prizes, greens fees, etc.

How do I decide what charities to benefit?
As a donor to NPT you have access to a database of more than 850,000 charities where you can conduct research at your leisure. We also encourage you to go to the Charitable Planning section of our website. We will guide you through a series of questions designed to focus your interests and goals. Our links section will give you resources for research into areas of interest and specific charities. And at NPT we're always available to answer questions and guide you in a direction that will make your philanthropy as rewarding as possible. Just give us a call at 1-888-878-7900.

Would a grant recommendation be declined?
A grant recommendation will be declined if it's not designated for a qualified charity, or if it's recommended to fulfill a pre-existing pledge, supports lobbying, campaigns, or other political activities, or provides a benefit -- for example, tickets to a fundraising golf outing, a purchase at a charitable auction, grant used to pay tuition school or college.

Can I make an anonymous grant?
Yes. For each grant you make you may specify either to be acknowledged or to remain anonymous.

Will my company match my gift that I recommend out of a donor advised fund?
Check with your employer to ascertain its policy on making matching gifts to recommendations out of donor advised funds.

Donor Advised Funds: Fees and Expenses

What are the administrative expenses for a donor advised fund?
NPT administrative fees are blended and vary with account balances. For a current fee schedule please consult our NPT Program Guide (PDF).

What are the investment fees for a donor-advised fund?
The fees vary with the type of investment. Fees for investment managers are deducted before earnings are allocated to individually funds. A complete description of investment options and current holdings can be found in our NPT Program Guide (PDF).

Donor Advised Funds: Investment Options

How does NPT's Board of Trustees choose the funds included in the donor advised fund pools?
NPT's Board of Trustees rely on our Investment Committee to identify some of the top performing investment funds among our financial service partners. Your gift to NPT is professionally managed by institutions recognized by well-known independent sources as among the best in their class. Participating institutions include:

Bear Stearns
JP Morgan Chase
Morgan Stanley
Pitcairn Financial Group
and other leading investment managers

NPT's Board of Trustees regularly review our investment strategies, the underlying investment options, and investment performance to ensure each underlying fund is appropriate for each pool's investment objective.

Donor Advised Funds: Policies and Procedures

Where can I find an overview of NPT Donor Advised Fund policies and procedures?
A complete description of our donor advised fund policies and procedures can be found in our NPT Program Guide (PDF) which you can download and print out, or call us toll-free at 1-888-878-7900 and request a copy to be mailed to you.

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.

Can I contributed closely-held/privately-held stock to a supporting organization?
Yes. 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 supporting organization. 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 for 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 donor advised fund.

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 compared setting up a private foundation:

Active Role for the Donor: The donor is permitted to maintain active participation in the management of the Support Organization.
Public Charity Status: Public charity status, like an SO, provides favorable tax benefits that are unavailable to private foundations.
Maximum Tax Benefits: Contributions of cash to the organization are deductible at the full rate (up to the 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: The 2% annual excise tax that a private foundation pays on the net investment income is eliminated.
No Payout Requirement: SOs are not required to comply with the minimum 5% payout in making annual grants and distributions.
Lower Costs: An SO can achieve cost savings through its access to NPT's professional staff, accounting systems, state-of-the-art technology, and director's and officer's liability insurance.