News

November 1st, 2015

Can a Non-DAF Transfer Funds to a DAF?

Recently, the Council on Foundation’s Legal Affairs team received an inquiry from a community foundation about the restrictions for transferring funds from one of its existing designated funds to a donor advised fund (DAF). The foundation explained that the fund’s purpose had become impractical, and therefore, was becoming increasingly difficult to administer.

In response to this question-can the foundation transfer funds from a designated fund to a DAF?-the Legal team concluded that this was a permissible action. The Legal team advised that, in transferring monies from the designated fund, it was extremely critical that the community foundation ensure the designated fund’s purpose be preserved. For example, if the purpose of the designated fund from which the monies are being transferred is to support education, this same purpose can be preserved in the granting of those funds through a DAF. 

However, if the purpose of the designated fund was to grant scholarships, a transfer to a DAF would be forbidden because the Pension Protection Act of 2006 prohibits grants to individuals from a DAF-therefore, forcing the purpose of the original designated fund to change. To learn more about how donors are using their donor-advised fund accounts, please call or email us any time.