Schedule D is a bit of a dumping ground, with places to report data about various types of assets, funds, and contributions you may hold. Part I looks at donor advised funds (DAFs). DAFs are funds that (a) are typically grouped together as contributions from a specific donor, (b) are maintained by a sponsoring organization, and (c) wherein the donor (or his or her appointee) has, or reasonably expects to have, advisory privileges about how the money is distributed or invested because of his or her status as a donor. DAFs are defined separately from how GAAP defines “funds,” so a designated piece of money can meet the definition of DAF but not a GAAP fund, or vice versa.
DAFs do not include funds described in any of these points:
- Funds that only make distributions to a single identified organization or governmental entity.
- Funds in which the donor, or his or her appointee, gives advice about which individuals receive grants for travel, study, etc., if these 3 criteria are met:
- The donor or appointee’s advisory privileges are exercised only in his or her capacity as a member of a committee in which all of the committee members are appointed by the sponsoring organization that holds the DAF.
- No combination of donors, their appointees, or related persons directly or indirectly control the committee. For this purpose, persons related to the donor or appointee include family members included in section 4958(f)(4), and any 35% controlled entity of the donor, appointee, or their family members.
- All grants from the fund are awarded on an objective and non-discriminatory basis using a procedure approved in advance by the board of directors of the sponsoring organization. The procedure must be designed to ensure that all grants must meet the requirements of 4945(g)(1), (2), or (3).
- Funds that the IRS exempts from being treated as a DAF, either because the fund or account is advised by a committee not directly or indirectly controlled by the donor or his or her appointee, or because the fund benefits a single identified charitable purpose.
Schedule D, Part I has 2 columns. In column (a), report DAFs. In column (b), report similar funds or accounts that you held at any point during the year over which a donor or his or her appointee had advisory privileges for the distribution or investment of the money, but which doesn’t meet the definition of a DAF. On lines 1-4, report:
- The number of each kind of fund that you held at the end of the year
- The total value of contributions to the funds
- The total value of grants made out of these funds, including grants outside of your organization and transfers within the organization.
- The total value of the funds, at the end of the fiscal year you’re reporting on your Form 990.
Schedule D can be found here, and more detailed instructions for filling it out are provided here. I will cover other parts of Schedule D in later posts. (Part II | Part III | Part V | Parts VI – X | Parts XI – XII)