CAP Philanthropic Vehicles & Structures Flashcards
6 cards from real CAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAP Philanthropic Vehicles & Structures flashcards as text
A Donor Advised Fund (DAF) is best described as:
Answer: A charitable giving account sponsored by a public charity where donors recommend grants
A DAF is a charitable giving account held by a sponsoring public charity; donors make irrevocable contributions, receive an immediate tax deduction, and recommend grants over time.
Which of the following is a key regulatory distinction between a public charity and a private foundation under U.S. tax law?
Answer: Private foundations must distribute at least 5% of assets annually; public charities have no such requirement
Private foundations are required to distribute at least 5% of the fair market value of their investment assets annually for charitable purposes, while public charities are not subject to this mandatory payout rule.
A Supporting Organization (SO) is a type of public charity. What is its defining characteristic?
Answer: It is organized and operated exclusively to support one or more specified public charities
A Supporting Organization is a 501(c)(3) public charity that maintains a formal relationship with and supports one or more specified public charities, qualifying it for public charity status.
What is a Charitable Gift Annuity (CGA) and who typically issues them?
Answer: A contract between a donor and a charity where the donor transfers assets and receives fixed income for life
A CGA is a contract between a donor and a nonprofit charity; the donor transfers assets in exchange for fixed lifetime income payments, with the remainder benefiting the charity.
Which philanthropic vehicle allows multiple donors to pool contributions, benefit from professional investment management, and receive a pro-rata share of income while supporting charity?
Answer: Pooled Income Fund
A Pooled Income Fund combines contributions from multiple donors into a single fund managed by the charity; each donor receives income proportional to their share until death, when the remainder goes to charity.
Under IRS rules, a private foundation engaging in a transaction that benefits a 'disqualified person' may face what consequence?
Answer: Excise taxes on self-dealing transactions under IRC Section 4941
Self-dealing transactions between a private foundation and disqualified persons (substantial contributors, officers, family members) trigger excise taxes under IRC Section 4941.