Helpful Grant Guidelines
Donors can recommend grants from their fund for charitable purposes. You can do this online via DonorView or manually by obtaining a Grant Recommendation Form from the forms section of our website.
The following guidelines are designed to help determine when you can use your donor-advised fund to support such events and memberships, and when you should utilize funds from another source.
Grants must be intended for charitable purposes only. The IRS prohibits donor-advised fund account holders, additional account users, and any of their family members from receiving anything above and beyond incidental benefits associated with a grant.
Examples of incidental benefits (generally acceptable):
- Coffee mugs
- Key chains
- Intangible religious benefits
Examples of non-incidental benefits (not acceptable)
- School tuition
- Raffle tickets or goods or services bought at a charitable auction
- Scholarship for a specific individual
- Certain dues or membership fees unless donor waives all benefits
- Cost to attend a charitable event
- To satisfy a pledge – financial obligation of an individual or entity
Special-Purpose Designation for Grants
Grants may be recommended for “special-purpose” use by the recipient charity, such as support for a project or research, or in honor of a person. This special purpose should be specifically noted in the grant recommendation.
Membership fees or dues to houses of worship—through which the only return comes in the form of intangible religious benefits under federal tax law—may be paid from a donor-advised fund. If any portion of the membership is not 100% tax-deductible, you can waive the tangible benefits.
Pledges and Multi-Year Agreements
Continuing grants may be paid over time to a designated charity. To do so, the donor must request that the iGiftFund enter into a grant agreement with the designated charity. This grant agreement will specify details such as the number of installments and payment dates of the grant. Grants may not be used for fulfilling legally binding pledges.
Charities often apportion an event’s admission cost as deductible and non-deductible. Provided that event admission is fully tax-deductible, you may recommend grants from your donor-advised fund to support and attend the event.
A bifurcated grant is one in which a donor pays for the deductible portion of an event (such as a fundraising gala) with funds from his or her donor-advised fund, and then pays for the non-deductible portion with other funds, such as personal checks or cash.
At iGiftFund, we are frequently asked whether it’s permissible for a donor to recommend a grant for the deductible portion of the purchase of a ticket to a fundraising event if he or she personally pays for the non-deductible portion.
The IRS’s answer to that question is no.
To learn more, simply email us at ask@iGiftFund.org or give us a call at 1-800-810-0366. We’d be more than happy to discuss this information in greater detail and answer any questions that you may have.
Note: This information is not intended to be a substitute for individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, donors should consult with a qualified tax advisor or CPA.