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From information provided by Terry Parker, Attorney, National Christian Foundation
It is permissible for a Private Foundation to contribute to a Donor Advised Fund (DAF) that it has set up at
the National Christian Foundation or at a Christian Community Foundation. There are several reasons that a Private Foundation might find this advantageous.
1. In order to meet the 5% distribution rule each year. A contribution to its DAF at the National Christian Foundation will qualify as a valid distribution, and then the Private Foundation can take as
long as it needs to make decisions and advise on the distribution from its DAF. Unless set up otherwise, recipients will still be informed of the source of the funds so that they can thank the
Private Foundation.
2.
In order to give anonymously. A DAF can be set up at the National Christian Foundation or other Christian Community Foundation that will pass on funds, showing to the recipient only that it came from a DAF.
3. In order to simplify giving to certain entities. The National Christian Foundation has been given the authority in its Private Letter Ruling from the IRS to make gifts to
(a) charities that do not yet have tax exempt status, but are doing charitable work;
(b) individuals that are "needy," or in "emergency" situations; and
(c) foreign
operations that are charitable according to USA standards, but have no 501(c)3 sponsor in the USA.
While the National Christian Foundation can give to these entities directly, the complexity of doing so led in 1996 to the establishment of Helping Hands Ministries. Gifts in these cases could be from the
Private Foundation's DAF to Helping Hands, and then to the ultimate recipient.
It is also permissible for a Private Foundation to make a gift to a DAF on which other persons have the authority to
advise the eventual distribution. In this case, the Private Foundation would not have any authority to further direct where the funds are to be gifted.
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