All organizations recognized as charities exempt under Section 501(c)(3) of the Tax Code are further subdivided pursuant to Section 509(a) between public charities--those that receive a broad base of public support--and private foundations--those whose revenue comes from a very limited set of donors and from investment income. (See Ready Reference Pages: “Calculating Public Support Percentage.”) Donor advised funds, generally speaking, are funds held by public charities that allow the donor or other adviser to recommend on distributions from the fund and sometimes on investments or investment managers. Donor advised funds have been subject to serious recent Congressional scrutiny and limitations. (See Ready Reference Page: “Congress Passes Charitable Reforms, Approves Limited Giving Incentives.”) Donor Advised funds make a lot of sense for many grantmakers unless they want to make grants to individuals or retain ultimate control over the money and provide job opportunities for family members. (See Ready Reference Page: “Donor Advised Funds Still Compare Well with Private Foundations.”)

 

More on obtaining financial statements

 

In a recent edition of Nonprofit Issues®, we noted that a person seeking financial information on a charity could ask for a copy of the organization’s Form 990 “tax return.” A sharp-eyed reader called our attention to the fact that Form 990 is actually an “information return” since no tax is due on the return. It is another situation in which colloquial language glosses over legitimate distinctions. Another sharp-eyed reader pointed out that a person may not need to wait for the charity to provide the report since most Forms 990 are available with a few clicks of a mouse at www.guidestar.org.