Disbursement Requests

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Contributions to NOFI’s funds are treated as gifts to a public charity and are generally tax deductible as allowed by law and subject to individual limitations. Under the Internal Revenue Code, deductions for charitable contributions are subject to certain percentage limitations that limit the deductions that can be taken to a stated percentage of adjusted gross income, or AGI, in the year the deduction is taken. There are limitations mandated by the Internal Revenue Service. Cash deductions are limited to 60% of AGI. Deductions for Securities and other depreciated assets are limited to 30% of AGI. Contributions exceeding these percentage limitations may be carried forward up to five subsequent years. There is no Capital Gains tax on gifts of appreciated assets. Your donor advised fund is not subject to estate taxes. The investments in your donor advised fund appreciate tax-free. If you are subject to alternative minimum tax (AMT), your contribution will reduce the AMT impact. Donors can deduct the full market value of closely held stock and real estate subject to the limitations above.

If there are any errors on your annual statement, please contact us immediately. All reported errors will be investigated immediately and any corrections needed, will be applied to your account.

Cash Contributions

Contributions may be in the form of cash equivalents (checks and credit card payments). A written acknowledgement will be sent for your contribution that will include a statement that no goods or services were provided by the charity in return for the donation, and the amount of donation. Cash contributions can be mailed in with or without a Disbursement Request form. Please include the name of the Donor Advised Fund in the memo section of the check into which it should be deposited. If you want to request the contributions be disbursed, please include the Disbursement Request Form with your contribution.

Non-cash Contributions

All assets contributed to a Donor Advised Fund at NOFI become irrevocable gifts to NOFI, and legal control and responsibility for the funds rest with NOFI, under IRS regulations. All funds established at NOFI are subject to NOFI’s “variance power,” as set forth in NOFI’s Articles of Incorporation, which states: “The Board of Directors of this Corporation shall have the power to modify any restriction or condition on the distribution of funds for any specified charitable purposes or to specified organizations if, in their sole judgment, (without the approval of any Donor Advised Fund Terms and Conditions trustee, custodian or agent), such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the area.”

The property has been held for more than a year and has appreciated significantly.
The property is marketable and relatively easy and cost-effective to liquidate.
The property is generally debt-free. If there is debt on the property, your contribution might be treated as a bargain sale to the charity, and you may be liable for certain taxes, e.g., capital gains.
You are willing to transfer the property irrevocably to the donor-advised fund, which will negotiate the sale price and control the sale, often using an experienced intermediary.
If a sale is expected, the terms of the sale should still be under negotiation. The documentation must not have proceeded to the point at which the IRS would consider it a prearranged sale. That could result in you bearing the tax liability for any gain on the sale.

These criteria most often apply to donations of a primary or secondary home or other residential property held for some time. Commercial real estate may also be donated under certain circumstances. Such gifts involve additional legal and tax considerations.

Contributions of real estate to a charity or donor advised fund account are generally deductible at fair market value—as determined by an independent qualified appraiser—on the date of contribution, whereas contributions of real estate to a private foundation are generally deductible at the lower of cost basis or market value.

Contributions Of Closely Held Business Interests

Contributions may be in the form of marketable securities, or business interests. Contributions other than cash equivalents or marketable securities may be subject to approval by NOFI’s Board of Directors. For non-publicly traded securities or other assets for which no readily liquid market exists, NOFI will exercise discretion as to the timing and price of sales. Gifts of business interests require a Planned Giving Agreement be executed upon creation of the Donor Advised Fund. The suggested minimum rate of giving is 2.5% annually.

Closely held businesses and alternate investments may be organized as corporations, or they may be limited partnerships or limited liability companies (LLCs) that are taxed as pass-through entities, with each partner or member taxed on his or her share of net income or gain. The entity’s form affects the tax consequences of a charitable gift of an equity interest. Generally, the income tax charitable deduction for a contribution of securities is the fair market value of the securities reduced by the amount of gain that would not have been long-term capital gain if the securities had been sold at fair market value.

Your deduction for a contribution of Subchapter S stock, in most instances, will not be the full fair market value of the stock, but will be reduced to the extent of your share of the corporation’s appreciated inventory and unrealized receivables, including depreciation recapture.

Stock—whether or not closely held—may be subject to restrictions on sale imposed by law, by agreement with an underwriter, or by a shareholders’ or other agreement. Restricted securities generally trade at a discount relative to freely traded shares.

The contribution of restricted stock to charity raises issues about the amount a donor may claim as an income tax charitable deduction. Long-term capital gain assets, including securities, may be deducted at fair market value when donated even if the shares are not considered readily marketable.

As a general rule, a donor who contributes a partnership interest or units of an LLC with no liabilities to a public charity or private operating foundation receives a tax deduction equal to the fair market value of the property, provided the donor has held it for more than a year. However, there is an important limitation to the extent the partnership owns ordinary income assets, such as unrealized receivables or inventory. Those assets—sometimes called Code Section 751 assets, or “hot assets”—may be included in the donor’s deduction only to the extent of the donor’s basis in the partnership, as if the donor had given a pro rata share of his or her interest in the partnership’s underlying assets.

NOFI is unlikely to accept an interest in a partnership that will produce UBTI unless it can be certain the distributions will cover its potential tax liability, and even then, it may have reservations about the receipt of UBTI (e.g., the burden and possibly enhanced audit risk associated with starting to file IRS Form 990-T).

Before accepting a gift of a partnership interest, particularly an interest in a partnership structure with multiple layers, NOFI will want to be sure the partnership is properly reporting all “reportable transactions”.

Contributions Of Boats, Autos, Or Anything With An Engine

Contributions may be in the form of motor driven vehicles. An executed title transferring ownership will be required. A qualified vehicle is any motor vehicle manufactured primarily for use on public streets, roads, and highways; a boat; or an airplane. However, a vehicle held by you primarily for sale to customers, such as inventory of a vehicle dealer, is not a qualified vehicle. If you donated a non-qualified vehicle, see IRS Publication 526 for the rules and limits that apply to property donations.

When you donate a motor vehicle, you will receive a written acknowledgement within 30 days. The acknowledgement will include your name and taxpayer identification number, the vehicle identification number, the date of the contribution, and one of the following:

a statement that no goods or services were provided by the charity in return for the donation, if that was the case,
a description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation, or,
a statement that goods or services provided by the charity consisted entirely of intangible religious benefits, if that was the case.

If the deduction you are claiming for a donated vehicle is greater than $500, but not more than $5,000, you must provide a copy of IRS form 8283 to NOFI. If the deduction you are claiming is greater than $5,000, must provide a copy of IRS form 8283 to NOFI who will sign and return a copy of the form for you to attach to your tax return. In addition, if the deduction is over $5,000 and not limited to the gross proceeds from the sale of your vehicle, you must get a written appraisal of your vehicle.

The appraisal must be made no more than 60 days before you donate the vehicle. You must provide a copy of the appraisal for the vehicle and a copy of IRS Form 8283 to NOFI. If IRS Form 8283 Section B is required and NOFI sells or otherwise disposes of a vehicle within three years after the date of receipt, NOFI will file Form 8283, Donee Information Return, with the IRS. On Form 8283, NOFI reports information identifying the donor and itself, and the amount it received upon sale or other disposition of the vehicle. NOFI will provide you with a copy of the form.