FAQ: Donor-Advised Fund

The Pension Protection Act of 2006 includes the first comprehensive regulation of donor-advised funds. These requirements generally took effect at the beginning of the tax year following enactment of the Act, for charities that hold assets in such funds. However, a provision barring the payment from donor-advised funds of grants, compensation, and similar payments to donors, advisors, and persons related to them took effect immediately on August 17, 2006. Understanding the definition of a donor-advised fund also is important to the implementation of the Act’s charitable IRA rollover provision because rollovers are not permitted into donor-advised funds.