7.1.8 Basic Quiz -- Donor Advised Funds

A donor advised fund (DAF) is created by a donor by setting aside funds and distributing those funds in a manner the donor sees fit.

True False

With a DAF, a donor retains full control over the disposition of the funds contributed.

True False

Because a donor retains recommendation status with the charity, the donor may not receive an income tax deduction for his or her contribution.

True False

Distribution of funds in excess of the recommendation of the donor to a charitable cause is evidence there are no material restrictions imposed on the DAF.

True False

The "B" charity offers DAFs to potential donors. All the solicitations contain a disclaimer stating that the donor's recommendations will not be binding on the charity. This is evidence of control by the charity and lack of material restrictions on the DAF funds.

True False

A charity's published guidelines containing specific charitable needs consistent with the charity's charitable purpose will not be considered when determining control and material restrictions.

True False

If a charity solicits funds and, in the course of the solicitation, makes representations that invoke an expectation from the donor that the donor's wishes will always be followed, this will be used in determining control and material restrictions.

True False

If a charity steadfastly follows the advice of donors on how funds in a DAF are used, this will not have much of an impact in attempting to determine the charity's control.

True False

Evidence that a charity has disagreed with a donor on how funds from a DAF should be applied offers a strong presumption that the charity does not lack meaningful control of the assets and that the donor has not included material restrictions on the DAF's uses.

True False

To determine if the DAF contains a material restriction, the IRS will examine DAFs on a case-by-case basis.