Legal Question of the Month Archive
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November 2024: Making a Required Minimum Distribution to a Donor-Advised Fund
Question: Can a donor make a required minimum distribution from an inherited IRA to a donor-advised fund?
Answer from Staff Counsel Remy Barnwell
A donor may make a required minimum distribution (RMD) to a donor-advised fund. The restrictions that exist around IRA distributions to donor-advised funds only apply to qualified charitable distributions (QCD), which allow donors aged 70 ½ or older to transfer assets directly from their IRA to a charitable organization without having to recognize the amount of the distribution as income.
If the individual who inherited the IRA is younger than 70 ½, they are not eligible to make QCDs from this account anyway and there would be no issue with the donor directing the RMD to a donor-advised fund. If the donor is older than 70 ½, then they will need to decide whether they prefer the more tax-efficient option of making a QCD (in which case the money could not go to a DAF) or if they prefer to contribute to a DAF (in which case the distribution cannot be treated as a QCD).
October 2024: Running for Local Public Office as a Board or Staff Member
Question: We have a board member who is running for local public office. Is this allowed and, if so, what do we need to be aware of?
Answer from Director of Legal Resources, Ben McDearmon
Some foundations have adopted policies stating that any board or staff member running for partisan elected office is expected to resign their position prior to announcing their candidacy in order to avoid the potential appearance of partisanship by the foundation.
On the other hand, there’s no general legal prohibition on someone serving as an elected official and also serving on the board of a foundation or other nonprofit, so some foundations might choose to allow it with significant safeguards in place to ensure there’s no appearance that the foundation is supporting the candidate.
All election-related activities must take place outside of the candidate’s work on behalf of the foundation and without using any foundation resources. The candidate should also avoid referring to their position with the foundation as part of their campaign, and if anyone else does bring up their foundation affiliation, the candidate must clarify that they are running solely in their capacity as a private citizen. If elected, the person would likely be prohibited from receiving any compensation or possibly even reimbursement for expenses, and they may be prohibited from soliciting charitable contributions on behalf of the foundation.
