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Donor-advised fund do’s and don’ts

A donor-advised fund is one of many types of funds you can establish at Aspen Community Foundation. Field-of-interest funds, designated funds, unrestricted funds, and scholarship funds are also popular and can make a big difference in the community while also fulfilling your goals for tax and charitable planning.

If you’ve established a donor-advised fund at Aspen Community Foundation, you know it’s useful because it allows you to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, you can recommend donations from the fund to your favorite charities to meet community needs as they emerge. 

Your gifts to your donor-advised fund are tax deductible transfers to Aspen Community Foundation, which is a charitable organization recognized under Internal Revenue Code Section 501(c)(3). Aspen Community Foundation follows the Internal Revenue Service’s requirements that disbursements from your donor-advised fund meet certain important qualifications to preserve that charitable tax status–for everyone’s benefit. It’s a good idea to periodically review a few types of disbursements that don’t meet the IRS’s rules and therefore are not permissible donations from your donor-advised fund. For example:

–A donor-advised fund cannot be used explicitly to satisfy a personal pledge to a charitable organization, such as to a capital campaign. Our team is happy to work with you to develop ways you can achieve your intentions to support your favorite organization’s fundraising goals. Please reach out if you are in this situation.

–Because donor-advised funds at Aspen Community Foundation fall under a different (and more favorable) set of IRS rules than private foundations, a donor-advised fund is restricted from supporting a private family foundation. Please reach out to our team to learn more about this requirement. We’d love to explore how your donor-advised fund and your private family foundation can work together to achieve your charitable goals. Some fund holders even decide to close their private foundation and consolidate their giving with Aspen Community Foundation to achieve greater impact, save on expenses, and achieve better tax results.

We look forward to hearing from you! As always, our team is honored to be your first call when you encounter a question about your donor-advised fund or any other charitable giving opportunity. 


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