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vised the sponsoring organization of the donor advised
fund to make the distribution.
‘‘(2) ON
THE
FUND
MANAGEMENT.—There is
hereby imposed on the agreement of any fund man-
ager to the making of a distribution, knowing that it
is a taxable distribution, a tax equal to 5 percent of
the amount thereof, unless such agreement is not will-
ful and is due to reasonable cause. The tax imposed
by this paragraph shall be paid by any fund manager
who agreed to the making of the distribution.
‘‘(b) JOINT AND SEVERAL LIABILITY.—For purposes of
subsection (a), if more than one person is liable under sub-
section (a)(1) or (a)(2) with respect to the making of a tax-
able distribution, all such persons shall be jointly and sever-
ally liable under such paragraph with respect to such dis-
tribution.
‘‘(c) TAXABLE DISTRIBUTION.—For purposes of this
subsection—
‘‘(1) IN GENERAL.—The term ‘taxable distribu-
tion’ means any distribution from a donor advised
fund to any person other than the sponsoring organi-
zation’s non donor advised funds or accounts or orga-
nizations described in section 170(b)(1)(A) (other
than any organization described in section 509(a)(3)
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or any sponsoring organization if such amount is for
maintenance in a donor advised fund).
‘‘(2) EXCEPTION.—Notwithstanding paragraph
(1), such term shall not include any distribution from
a donor advised fund to any organization described
in section 170(f)(17)(B)(ii) to the extent such dis-
tribution is not prohibited under regulations.
‘‘(d) FUND MANAGER.—For purposes of this sub-
chapter, the term ‘fund manager’ means, with respect to
any sponsoring organization of a donor advised fund—
‘‘(1) an officer, director, or trustee of such spon-
soring organization (or an individual having powers
or responsibilities similar to those of officers, direc-
tors, or trustees of the sponsoring organization), and
‘‘(2) with respect to any act (or failure to act),
the employees of the sponsoring organization having
authority or responsibility with respect to such act
(or failure to act).
‘‘SEC. 4969. TAXES ON PROHIBITED BENEFITS.
‘‘(a) IMPOSITION OF TAXES.—
‘‘(1) ON THE DONOR, DONOR ADVISOR, OR RE-
LATED PERSON.—There is hereby imposed on the ad-
vice of any person described in subsection (c) to have
a sponsoring organization of a donor advised fund
make a distribution from such fund which results in
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such a person receiving, directly or indirectly, a more
than incidental benefit as a result of such distribu-
tion, a tax equal to 25 percent of the amount of such
distribution. The tax imposed by this paragraph shall
be paid by such person who advised the sponsoring
organization of the donor advised fund to make the
distribution.
‘‘(2) ON
THE
RECIPIENT
OF
THE
BENEFIT.—
There is hereby imposed on any person described in
subsection (c) who receives a benefit described in
paragraph (1), a tax equal to 25 percent of the
amount of the distribution described in paragraph
(1).
‘‘(3) ON
THE
FUND
MANAGEMENT.—There is
hereby imposed on the agreement of any fund man-
ager to the making of a distribution, knowing that
such distribution would confer a benefit described in
paragraph (1), a tax equal to 10 percent of the
amount of such distribution, unless such agreement is
not willful and is due to reasonable cause. The tax
imposed by this paragraph shall be paid by any fund
manager who agreed to the making of the distribu-
tion.
‘‘(b) JOINT AND SEVERAL LIABILITY.—For purposes of
subsection (a), if more than one person is liable under sub-
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section (a)(1), (a)(2), or (a)(3) with respect to the making
of a distribution described in subsection (a), all such per-
sons shall be jointly and severally liable under such para-
graph with respect to such distribution.
‘‘(c) DONOR, DONOR ADVISOR, OR RELATED PER-
SON.—A person is described in this subsection if such per-
son is described in section 4958(f)(1)(D) (determined with-
out regard to any investment advisor).’’.
(b) ABATEMENT OF TAXES ALLOWED.—Section 4963
is amended—
(1) by inserting ‘‘4967, 4968, 4969,’’ after
‘‘4958,’’ each place it appears in subsections (a) and
(c),
(2) by inserting ‘‘4967,’’ after ‘‘4958,’’ in sub-
section (b),
(3) in subsection (d)(2), by striking ‘‘and’’ at the
end of subparagraph (B), by striking the period at the
end of subparagraph (C) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(D) in the case of the second tier tax im-
posed by section 4967(b), reducing the amount of
the undistributed amount to zero.’’, and
(4) in subsection (e)(2), by redesignating sub-
paragraphs (C) and (D) as subparagraphs (E) and
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(F), respectively, and by inserting after subparagraph
(B) the following new subparagraphs:
‘‘(C) in the case of section 4967(a)(1), on
the first day of the taxable year for which there
was a failure to distribute,
‘‘(D) in the case of paragraph (2) or (3) of
section 4967(a), on the 181st day of the taxable
year for which there was a failure to distribute,’’.
(c) CONFORMING AMENDMENTS.—
(1) The table of subchapters for chapter 42, as
amended by this Act, is amended by adding at the
end the following new item:
‘‘SUBCHAPTER G. DONOR ADVISED FUNDS.’’.
(2) Section 6213(e) is amended by inserting
‘‘4967 (relating to taxes on sponsoring organizations
of donor advised funds for failure to meet distribution
requirements),’’ after ‘‘benefit),’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 232. PROHIBITED TRANSACTIONS.
(a) DISQUALIFIED PERSONS.—
(1) IN
GENERAL.—Paragraph (1) of section
4958(f) is amended by striking ‘‘and’’ at the end of
subparagraph (B), by striking the period at the end
of subparagraph (C) and inserting ‘‘, and’’, and by
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adding after subparagraph (C) the following new sub-
paragraph:
‘‘(D) any person who is described in para-
graph (7) with respect to any sponsoring organi-
zation (as defined in section 4967(g)(1)).’’.
(2) DONORS, DONOR ADVISORS, AND INVESTMENT
ADVISORS
TREATED
AS
DISQUALIFIED
PERSONS.—
Section 4958(f) is amended by adding at the end the
following new paragraph:
‘‘(7) DONORS, DONOR
ADVISORS, AND
INVEST-
MENT ADVISORS WITH RESPECT TO SPONSORING OR-
GANIZATIONS.—For purposes of paragraph (1)(D)—
‘‘(A) IN GENERAL.—A person is described
in this paragraph if such person—
‘‘(i) 
is 
described 
in 
section
4967(g)(2)(A)(iii),
‘‘(ii) is an investment advisor,
‘‘(iii) is a member of the family of an
individual described in clause (i) or (ii), or
‘‘(iv) is a 35-percent controlled entity
(as defined in paragraph (3) by sub-
stituting ‘persons described in clause (i),
(ii), or (iii) of paragraph (7)(A)’ for ‘per-
sons described in subparagraph (A) or (B)
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of paragraph (1)’ in subparagraph (A)(i)
thereof).
‘‘(B) INVESTMENT ADVISOR.—The term ‘in-
vestment advisor’ means, with respect to any
sponsoring organization (as defined in section
4967(g)(1)), any person (other than an employee
of such organization) compensated by such orga-
nization for managing the investment of, or pro-
viding investment advice with respect to, assets
maintained in donor advised funds (as defined
in section 4967(g)(2)) owned by such organiza-
tion.’’.
(3) DONORS, DONOR ADVISORS, AND INVESTMENT
ADVISORS TREATED AS DISQUALIFIED PERSONS WITH
RESPECT TO A SPONSORING ORGANIZATION WHICH IS
A
PRIVATE
FOUNDATION.—Section 4946(a)(1) is
amended by striking ‘‘and’’ at the end of subpara-
graph (H), by striking the period at the end of sub-
paragraph (I) and inserting ‘‘, and’’, and by adding
at the end the following new subparagraph:
‘‘(J) 
a 
person 
described 
in 
section
4958(f)(1)(D).’’.
(b) CERTAIN TRANSACTIONS TREATED
AS EXCESS
BENEFIT TRANSACTIONS.—
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(1) IN GENERAL.—Section 4958(c) is amended
by redesignating paragraph (2) as paragraph (3) and
by inserting after paragraph (1) the following new
paragraph:
‘‘(2) SPECIAL
RULES
FOR
DONOR
ADVISED
FUNDS OWNED BY SPONSORING ORGANIZATIONS.—In
the case of any donor advised fund (as defined in sec-
tion 4967(g)(2)) of a sponsoring organization (as de-
fined in section 4967(g)(1))—
‘‘(A) the term ‘excess benefit transaction’ in-
cludes any grant, loan, compensation, or other
payment from such fund to a person described in
subsection (f)(1)(D) (determined without regard
to any investment advisor) with respect to such
fund, and
‘‘(B) the term ‘excess benefit’ includes, with
respect to any transaction described in subpara-
graph (A), the amount of any such grant, loan,
compensation, or other payment.
Notwithstanding the last sentence of subsection (e), a
sponsoring organization shall be treated as an appli-
cable tax-exempt organization to the extent necessary
to carry out this paragraph.’’.
(2) SPECIAL RULE FOR CORRECTION OF TRANS-
ACTION.—Section 4958(f)(6) is amended by inserting
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‘‘, except that in the case of any correction of an ex-
cess benefit transaction described in subsection (c)(2),
no amount repaid in a manner prescribed by the Sec-
retary may be held in, or credited to, any donor ad-
vised fund’’ after ‘‘standards’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 233. TREATMENT OF CHARITABLE CONTRIBUTION DE-
DUCTIONS TO DONOR ADVISED FUNDS.
(a) INCOME.—Section 170(f) (relating to disallowance
of deduction in certain cases and special rules), as amended
by this Act, is amended by adding at the end the following
new paragraph:
‘‘(17) 
CONTRIBUTIONS
TO
DONOR
ADVISED
FUNDS.—
‘‘(A) IN GENERAL.—A deduction otherwise
allowed under subsection (a) for any contribu-
tion to a sponsoring organization (as defined in
section 4967(g)(1)) to be maintained in any
donor advised fund (as defined in section
4967(g)(2)) of such organization shall only be al-
lowed if—
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‘‘(i) such sponsoring organization is
not described in paragraph (3), (4), or (5)
of subsection (c) or section 509(a)(3), and
‘‘(ii) the taxpayer obtains a contem-
poraneous written acknowledgment (deter-
mined under rules similar to the rules of
paragraph (8)(C) from the sponsoring orga-
nization that such organization has exclu-
sive legal control over the assets contributed.
‘‘(B) CONTRIBUTIONS TO TYPE I OR TYPE II
SUPPORTING ORGANIZATIONS.—
‘‘(i) IN
GENERAL.—Notwithstanding
subparagraph (A)(i), a contribution to a
sponsoring organization (as so defined) de-
scribed in clause (ii) to be maintained in
any donor advised fund (as so defined) of
such organization shall be allowed to the ex-
tent not prohibited by regulations.
‘‘(ii) ORGANIZATION DESCRIBED.—An
organization is described in this clause if
the organization meets the requirements of
subparagraphs (A) and (C) of section
509(a)(3) and is—
‘‘(I) operated, supervised, or con-
trolled by one or more organizations
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described in paragraph (1) or (2) of
section 509(a), or
‘‘(II) supervised or controlled in
connection with one or more such orga-
nizations.’’.
(b) ESTATE.—Section 2055(e) is amended by adding
at the end the following new paragraph:
‘‘(5) 
CONTRIBUTIONS
TO
DONOR
ADVISED
FUNDS.—
‘‘(A) IN GENERAL.—A deduction otherwise
allowed under subsection (a) for any contribu-
tion to a sponsoring organization (as defined in
section 4967(g)(1)) to be maintained in any
donor advised fund (as defined in section
4967(g)(2)) of such organization shall only be al-
lowed if—
‘‘(i) such sponsoring organization is
not described in paragraph (3) or (4) of
subsection (a) or section 509(a)(3), and
‘‘(ii) the taxpayer obtains a contem-
poraneous written acknowledgment (deter-
mined under rules similar to the rules of
section 170(f)(8)(C)) from the sponsoring
organization that such organization has ex-
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clusive legal control over the assets contrib-
uted.
‘‘(B) CONTRIBUTIONS TO TYPE I OR TYPE II
SUPPORTING ORGANIZATIONS.—
‘‘(i) IN
GENERAL.—Notwithstanding
subparagraph (A)(i), a contribution to a
sponsoring organization (as so defined) de-
scribed in clause (ii) to be maintained in
any donor advised fund (as so defined) of
such organization shall be allowed to the ex-
tent not prohibited by regulations.
‘‘(ii) ORGANIZATION DESCRIBED.—An
organization is described in this clause if
the organization meets the requirements of
subparagraphs (A) and (C) of section
509(a)(3) and is—
‘‘(I) operated, supervised, or con-
trolled by one or more organizations
described in paragraph (1) or (2) of
section 509(a), or
‘‘(II) supervised or controlled in
connection with one or more such orga-
nizations.’’.
(c) GIFT.—Section 2522(c) is amended by adding at
the end the following new paragraph:
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‘‘(13) 
CONTRIBUTIONS
TO
DONOR
ADVISED
FUNDS.—
‘‘(A) IN GENERAL.—A deduction otherwise
allowed under subsection (a) for any contribu-
tion to a sponsoring organization (as defined in
section 4967(g)(1)) to be maintained in any
donor advised fund (as defined in section
4967(g)(2)) of such organization shall only be al-
lowed if—
‘‘(i) such sponsoring organization is
not described in paragraph (3) or (4) of
subsection (a) or section 509(a)(3), and
‘‘(ii) the taxpayer obtains a contem-
poraneous written acknowledgment (deter-
mined under rules similar to the rules of
section 170(f)(8)(C)) from the sponsoring
organization that such organization has ex-
clusive legal control over the assets contrib-
uted.
‘‘(B) CONTRIBUTIONS TO TYPE I OR TYPE II
SUPPORTING ORGANIZATIONS.—
‘‘(i) IN
GENERAL.—Notwithstanding
subparagraph (A)(i), a contribution to a
sponsoring organization (as so defined) de-
scribed in clause (ii) to be maintained in
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any donor advised fund (as so defined) of
such organization shall be allowed to the ex-
tent not prohibited by regulations.
‘‘(ii) ORGANIZATION DESCRIBED.—An
organization is described in this clause if
the organization meets the requirements of
subparagraphs (A) and (C) of section
509(a)(3) and is—
‘‘(I) operated, supervised, or con-
trolled by one or more organizations
described in paragraph (1) or (2) of
section 509(a), or
‘‘(II) supervised or controlled in
connection with one or more such orga-
nizations.’’.
(d) REGULATIONS.—The regulations prescribed under
sections 
170(f)(17)(B)(i), 
2055(e)(5)(B)(i),
2522(c)(13)(B)(i), 4967(e)(i)(A)(ii), and 4968(c)(2) of the
Internal Revenue Code of 1986 shall deny a deduction for
contributions to sponsoring organizations (as defined in
section 4967(g)(1) of such Code) which are described in sec-
tion 170(f)(17)(B)(ii) of such Code and shall apply excise
taxes to distributions from donor advised funds (as defined
in section 4967(g)(2) of such Code) and sponsoring organi-
zations (as so defined) to organizations so described in cases
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where the donor of the contributions or the donor or donor
advisor of the amounts distributed directly or indirectly
controls a supported organization (as defined in section
509(f)(3) of such Code) of such organization.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions made after the date
which is 180 days after the date of the enactment of this
Act.
SEC. 234. RETURNS OF, AND APPLICATIONS FOR RECOGNI-
TION BY, SPONSORING ORGANIZATIONS.
(a) MATTERS INCLUDED ON RETURNS.—
(1) IN GENERAL.—Section 6033, as amended by
this Act, is amended by redesignating subsection (j)
as subsection (k) and by inserting after subsection (i)
the following new subsection:
‘‘(j) ADDITIONAL PROVISIONS RELATING
TO SPON-
SORING ORGANIZATIONS.—Every organization described in
section 4967(g)(1) shall, on the return required under sub-
section (a) for the taxable year—
‘‘(1) list the total number of donor advised funds
(as defined in section 4967(g)(2)) it owns at the end
of such taxable year,
‘‘(2) indicate the aggregate value of assets held in
such funds at the end of such taxable year, and
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‘‘(3) indicate the aggregate contributions to and
grants made from such funds during such taxable
year.’’.
(2) 
EXTENSION
OF
STATUTE
OF
LIMITA-
TIONS6501(c) is amended by adding at the end the
following new paragraph:
‘‘(11) DONOR ADVISED FUNDS.—If a sponsoring
organization (as defined in section 4967(g)(1)) fails
to include on any return for any taxable year any in-
formation with respect to any donor advised fund of
such organization which is required under section
6033(j) to be included with such return, the time for
assessment of any tax imposed under subchapter G of
chapter 42 with respect to any distribution from such
donor advised fund shall not expire before the date
which is 3 years after the date on which the secretary
is furnished the information so required.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to returns filed for tax-
able years ending after the date of the enactment of
this Act.
(b) MATTERS INCLUDED ON EXEMPT STATUS APPLI-
CATION.—
(1) IN GENERAL.—Section 508 is amended by
adding at the end the following new subsection:
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‘‘(f) ADDITIONAL PROVISIONS RELATING
TO SPON-
SORING ORGANIZATIONS.—A sponsoring organization (as
defined in section 4967(g)(1)) shall give notice to the Sec-
retary (in such manner as the Secretary may provide)
whether such organization maintains or intends to main-
tain donor advised funds (as defined in section 4967(g)(2))
and the manner in which such organization plans to oper-
ate such funds.’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall apply to organizations applying
for tax-exempt status after the date of the enactment
of this Act.
PART III—IMPROVED ACCOUNTABILITY OF
SUPPORTING ORGANIZATIONS
SEC. 241. REQUIREMENTS FOR SUPPORTING ORGANIZA-
TIONS.
(a) TYPES OF SUPPORTING ORGANIZATIONS.—Sub-
paragraph (B) of section 509(a)(3) is amended to read as
follows:
‘‘(B) is—
‘‘(i) operated, supervised, or controlled
by one or more organizations described in
paragraph (1) or (2),
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‘‘(ii) supervised or controlled in con-
nection with one or more such organiza-
tions, or
‘‘(iii) operated in connection with one
or more such organizations, and’’.
(b) REQUIREMENTS
FOR
SUPPORTING
ORGANIZA-
TIONS.—Section 509 (relating to private foundation de-
fined) is amended by adding at the end the following new
subsection:
‘‘(f) REQUIREMENTS
FOR SUPPORTING ORGANIZA-
TIONS
‘‘(1) TYPE
III
SUPPORTING
ORGANIZATIONS.—
For purposes of subsection (a)(3)(B)(iii), an organi-
zation shall not be considered to be operated in con-
nection with any organization described in para-
graph (1) or (2) of subsection (a) unless such organi-
zation meets the following requirements:
‘‘(A) APPLICATION REQUIREMENT.—The or-
ganization provides to the Secretary, as a part
of any notification filed under section 508(a)
after the date of the enactment of this subsection,
a letter from each supported organization ac-
knowledging that the supported organization has
been designated by such organization as a sup-
ported organization.
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‘‘(B) RESPONSIVENESS.—For each taxable
year beginning after the date of the enactment of
this subsection, the organization provides to each
supported organization such information as the
Secretary may require to ensure that such orga-
nization is responsive to the needs or demands of
the supported organization.
‘‘(C) SUPPORTED ORGANIZATIONS.—
‘‘(i) IN GENERAL.—The organization—
‘‘(I) is not operated in connection
with more than 5 supported organiza-
tions, and
‘‘(II) is not operated in connec-
tion with any supported organization
that is not organized in the United
States on any date after the date which
is 180 days after the date of the enact-
ment of this subsection.
‘‘(ii) SPECIAL RULE FOR EXISTING OR-
GANIZATIONS.—If the organization is oper-
ated in connection with more than 5 sup-
ported organizations on the date of the en-
actment of this subsection—
‘‘(I) clause (i)(I) shall not apply,
and
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‘‘(II) the organization may not be
operated in connection with any other
organization after such date unless the
total number of supported organiza-
tions is 5 or less.
‘‘(D) CONTRIBUTIONS TO DONOR ADVISED
FUNDS.—The organization makes no contribu-
tions to or for the use of any donor advised fund
(as defined in section 4967(g)(2)).
‘‘(2) 
ORGANIZATIONS
CONTROLLED
BY
DO-
NORS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a)(3)(B), an organization shall not be
considered to be—
‘‘(i) operated, supervised, or controlled
by any organization described in paragraph
(1) or (2) of subsection (a), or
‘‘(ii) operated in connection with any
organization described in paragraph (1) or
(2) of subsection (a),
if such organization accepts any gift or contribu-
tion from any person described in subparagraph
(B).
‘‘(B) PERSON DESCRIBED.—A person is de-
scribed in this subparagraph if such person is—
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‘‘(i) a person (other than an organiza-
tion described in paragraph (1), (2), or (4)
of section 509(a)) who controls, directly or
indirectly, either alone or together with per-
sons described in clauses (ii) and (iii), the
governing body of a supported organization,
‘‘(ii) a member of the family (deter-
mined under section 4958(f)(4)) of an indi-
vidual described in clause (i), or
‘‘(iii) a 35-percent controlled entity (as
defined in section 4958(f)(3) by substituting
‘persons described in clause (i) or (ii) of sec-
tion 509(f)(2)(B)’ for ‘persons described in
subparagraph (A) or (B) of paragraph (1)’
in subparagraph (A)(i) thereof).
‘‘(3) SUPPORTED ORGANIZATION.—For purposes
of this subsection, the term ‘supported organization’
means, with respect to an organization described in
subsection (a)(3), an organization described in para-
graph (1) or (2) of subsection (a)—
‘‘(A) for whose benefit the organization de-
scribed in subsection (a)(3) is organized and op-
erated, or