USA – NEVADA Law and Practice Contributed by: Brian Steadman, Alexander LeVeque, Jeffrey Luszeck and Craig Friedel, Solomon Dwiggins Freer & Steadman
• lower tax deduction limits when compared to other methods (eg, cash contributions deductible up to 30% of AGI); • subject to 1.39% excise tax on net investment income; • must publicly disclose donors, salaries, invest - ments, and grantees on IRS filings (Form 990-PF); and • strict rules on self-dealing, jeopardising invest - ments, and political activity. Donor-Advised Funds (DAFs) Advantages: • immediate tax deduction in the year of contribu - tion, even if grants are made later; • higher tax deduction limits when compared to pri - vate foundations (eg, cash contributions deductible up to 60% of AGI); • simplicity and low-cost (easy setup; no need to file a separate tax return or manage compliance – the sponsoring organisation handles everything); • contributions can be invested and grow tax-free within the DAF; • privacy (unlike private foundations, DAFs do not require public disclosure of donors, grants, or finances (though the sponsoring organisation does file IRS Form 990)); • donors can name successor advisors (eg, children or heirs) to continue the giving strategy after their death; and • unlike private foundations (which must distrib - ute 5% annually), DAFs have no federal payout requirement.
Disadvantages: • lack of control (once one contributes, the assets legally belong to the DAF sponsor (a public char - ity); one can recommend grants, but the sponsor must approve them (although approvals are usually routine)); • limited grant options (can only donate to IRS-quali - fied 501 (c)(3) public charities); and • less family engagement (one cannot employ family or staff, run direct charitable programmes or create a branded philanthropic legacy as one could with a private foundation).
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