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The unappreciated risk in a setup like this is that multiple donors could inadvertantly give the DAF sizable impact in voting shares. As I understand it, the F
by Digory 8y ago
The unappreciated risk in a setup like this is that multiple donors could inadvertantly give the DAF sizable impact in voting shares. As I understand it, the Fund, not the donor, owns and votes any donated shares.
If two cofounders sign the Giving Pledge and each give 50% of their voting shares to the same, local DAF, the DAF winds up with more shares than either donor. And it can vote them as a block.
- bklyn11201 8y ago"Generally, a DAF and its disqualified persons together may own no more than 20% of the voting stock, profits interest, capital interest, or beneficial interest in a business enterprise." http://www.nonprofitlawblog.com/donor-advised-funds/ http://www.nonprofitlawblog.com/donor-advised-funds/
- Digory 8y agoInteresting. It appears there are two big loopholes to the 20% limit: a general five-year exception that allows DAFs to wind out of large donations, and a new exception where the DAF acquires 100% of the voting interest.[0] [1]https://clarknuber.com/articles/private-foundations-receive-excess-business-holdings-relief-bipartisan-budget-act/ https://clarknuber.com/articles/private-foundations-receive-...