The Council's Legal Resources team provides trainings, publications, and resources to help you stay up to date on foundation operations and legal compliance. Our staff includes attorneys with experience in nonprofit and tax law who understand the unique legal and compliance issues facing community foundations. Our staff counsel are here to help you by advising on matters related to your organizational structure and governance, compliance, fundraising, self-dealing, and other legal matters.

There are community foundation specific legal resources available on our website, including answers to the most frequently asked member questions on donor-advised funds, endowments, global and domestic grantmaking, fundraising, scholarships, impact investing, planned gifts, and IRA distributions. In addition, we offer sample templates for the most common legal needs, such fund agreements and gift acceptance policies. Our attorneys may review Council member fund agreements and may offer edits and feedback. We also publish legal guidance and offer webinars and analysis on developing legislation relevant to the philanthropic sector.

Legal Question of the Month – February 2025
Expenditure Responsibilities for Grants from Donor-Advised Funds

Question
What are we legally required to have/follow in relation to expenditure responsibilities? Especially for grants coming from donor-advised funds. 

Answer from Staff Counsel, Remy Barnwell
The legal requirements of expenditure responsibility can be found in section 4945(h) of the Internal Revenue Code. It clarifies that the foundation is responsible to exert all reasonable efforts to establish adequate procedures to see that the grant is spent solely for the purpose for which it was made, obtain full and complete reports from the grantee on how the funds are spent, and make full and detailed reports regarding the grants to the IRS.

Expenditure responsibility is a requirement for all grants from donor-advised funds to non-charities. Although distributions from other fund types to non-charities don’t face the same legal requirements, it’s a best practice to adopt a due diligence policy which you can think of as “diet” expenditure responsibility or expenditure responsibility “light.” With any grant to a non-charity, no matter the fund type, you want to be sure that the assets are used solely for the agreed upon charitable purpose. 

Council members are encouraged to send any legal inquiries to legal@cof.org.

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Donor Advised Funds

Donor-Advised Funds (DAFs)

Scholarship Funds

Scholarship Funds and PPA Compliance

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Council members get unlimited access to legal services and free access to our longer publications, like the Compendium of Legal Resources. Members also have access to the Philanthropy Exchange, our online community where members can pose questions to peers.

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Legal Matters for Community Foundations

The Council offers Legal Matters workshops to address the broad legal and practical questions faced by community foundations. These sessions cover topics such as administering funds, grants, and community foundation activities. They are designed to be interactive, allowing participants to engage in discussions and deep dives into specific legal complexities.

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An Overview of the Law Governing Community Foundations

This chapter of Mastering Foundation Law provides a comprehensive legal guide for community foundations. It covers federal tax laws, state-specific regulations, and the common legal characteristics of community foundations. This resource is essential for understanding the legal framework that governs community foundations.

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Accepting Cryptocurrency as Charitable Contributions

This publication will help community foundations navigate questions and concerns around receiving cryptocurrency as charitable contributions. Get comprehensive, state-by-state information on how your foundation can process any of the 6,000-and-growing cryptocurrencies that may be gifted.

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Legal Disclaimer

All information on this website, and all publications, articles, email correspondence, and telephone consultations provided by Council attorneys and legal staff are intended for informational purposes only and not as part of an attorney-client relationship. Council attorneys are not licensed in every state and cannot provide legal representation. This information is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances and may not be relied upon for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Council members may email legal@cof.org with inquiries and for more information.

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