What is a Donor Advised Fund?

Blackbaud’s YourCause CSRConnect and GrantsConnect leverage our partnership with the Blackbaud Giving Fund (BBGF) to allow clients and employees to make donations to charitable organizations through its Donor Advised Fund (DAF).

Note: For more information about BBGF, see the About the Blackbaud Giving Fund resource.

 

What is a Donor Advised Fund?

A DAF is a type of giving program administered by a third party (in this case the Blackbaud Giving Fund) that allows donors to receive immediate tax benefits (donations treated as tax-deductible charitable contributions) with the flexibility to easily support their favorite charities.

 

What are the benefits of using a Donor Advised Fund?

  1. A DAF can send the grants directly to charities. Without access to a DAF, there would be a long and intensive sign-up process for charities to receive their grants.

  2. A DAF has the authority to issue receipts for donations which makes the grant a charitable gift. It allows Blackbaud to take in funds and, through the Blackbaud Giving Fund, distribute them directly to charities to serve a public good.

  3. DAFs handle all the compliance requirements. You don't have to worry about who is an eligible charity who is an eligible charity or whether the grants are for a charitable purpose. The DAF manages compliance of these items to make sure they are in line with U.S. IRS requirements.

 

Who is eligible to receive grants from a Donor Advised Fund?

  • Most U.S. charities are eligible. There are some types that are not eligible, but that is where Blackbaud does the heavy lifting. We make sure charities are eligible prior to sending out grants. If a charity might be eligible, but we need further information, we will work with the charity to determine their eligibility.

  • Foreign charities that are either approved through one of our international partners or through Blackbaud’s equivalency determination process.

    • Equivalency determination is a process by which the Blackbaud Giving Fund evaluates a foreign charity to make a reasonable, good-faith determination that the organization is the equivalent of a U.S. public charity.

 

What can't we do using a Donor Advised Fund?

  • Blackbaud can’t refund a grant once the donation is made. We can work with the donor to have their grant redirected to another eligible charity or it can go to the preferred charity selected by the employer. In the event that no decision is made, the Blackbaud Giving Fund will select an appropriate charity to send the funds to.

  • The DAF cannot send grants to individuals.

  • The DAF cannot send grants to support political campaigns or lobbying activity.

  • The DAF cannot send grants to reimburse a donor for expenses or expenditures, even if made for a charitable purpose.

  • The DAF cannot send grants to charities that provide a significant benefit to the donor, employee of the donor, a family member of the donor, or an entity that is 35% or more controlled by the donor. Examples are:

    • Dues

    • Membership fees

    • Tuition

    • Tickets or tables for events or galas

    • Goods from a charitable auction

    • Other goods and services

 

Eligibility Requirements

Eligible U.S. grants include grants to:

  1. churches or conventions or associations of churches (§170(b)(1)(A)(i))

  2. universities, colleges, and primary schools (§170(b)(1)(A)(ii))

  3. hospitals and medical research organizations (§170(b)(1)(A) (iii))

  4. organizations formed for the benefit of public universities (§170(b)(1)(A)(iv))

  5. estates and possessions of the United States and political subdivisions of the United States and its states and possessions (§170(b)(1)(A)(v))

  6. publicly-supported charities (§170(b)(1)(A)(vi) or §509(a)(2))

  7. private operating foundations (§4942(j)(3))

  8. Type I, Type II or functionally integrated Type III supporting organizations (§509(a)(3))

 

Ineligible U.S. grants include grants to:

  1. private-non-operating foundations (§509(a))

  2. non-functionally integrated Type III supporting organizations (§509(a)(3))

  3. support a political campaign or lobbying activity