the end of subparagraph (B) and inserting ‘‘, and’’, and 
by adding at the end the following new subparagraph: 
‘‘(C) in the case of a contribution to a 
qualified donor advised fund (as defined in 
paragraph (19)(D)), the taxpayer identifies for 
the sponsoring organization a preferred organi-
zation for the purposes of making distributions 
of so much of the amount contributed (and any 
earnings attributable thereto) as has not been 
distributed before the end of the last day of the 
14th taxable year beginning after the taxable 
year in which the contribution was made.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after the 
date of the enactment of this Act. 
SEC. 3. FAILURE OF DONOR ADVISED FUNDS TO DIS-
TRIBUTE CONTRIBUTIONS. 
(a) IN GENERAL.—Subchapter G of chapter 42 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘SEC. 4967A. FAILURE OF DONOR ADVISED FUNDS TO DIS-
TRIBUTE CONTRIBUTIONS. 
‘‘(a) IN GENERAL.—In the case of a contribution 
which is held in a donor advised fund (other than a quali-
fied community foundation donor advised fund), there is 
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hereby imposed a tax equal to 50 percent of so much of 
the portion of such contribution (and any earnings attrib-
utable thereto) as has not been distributed by the spon-
soring organization in a qualifying distribution before the 
last day of the sixth month following the last day of the 
applicable taxable year with respect to such contribution. 
The tax imposed by this subsection shall be paid by such 
sponsoring organization. 
‘‘(b) APPLICABLE TAXABLE YEAR.—For purposes of 
this section, the term ‘applicable taxable year’ means— 
‘‘(1) in the case of a contribution to a qualified 
donor advised fund, the 14th taxable year beginning 
after the taxable year in which the contribution was 
made, and 
‘‘(2) in the case of a contribution to any other 
donor advised fund (other than a qualified commu-
nity foundation donor advised fund), the 49th tax-
able year beginning after the taxable year in which 
the contribution was made. 
‘‘(c) DEFINITIONS AND OTHER RULES.— 
‘‘(1) QUALIFIED DONOR ADVISED FUND.—The 
term ‘qualified donor advised fund’ has the meaning 
given such term under section 170(f)(19)(D). 
‘‘(2) 
QUALIFIED
COMMUNITY
FOUNDATION 
DONOR ADVISED FUND.—The term ‘qualified com-
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munity foundation donor advised fund’ has the 
meaning 
given 
such 
term 
under 
section 
170(f)(19)(E). 
‘‘(3) QUALIFYING
DISTRIBUTION.—The term 
‘qualifying distribution’ has the meaning given such 
term under section 170(f)(19)(A)(ii). 
‘‘(4) ORDERING
RULE.—Rules similar to the 
rules of section 170(f)(19)(A)(iii) shall apply for 
purposes of this section.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter G of chapter 42 of such Code is 
amended by adding at the end the following new item: 
‘‘Sec. 4967A. Failure of donor advised funds to distribute contributions.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after the 
date of the enactment of this Act. 
SEC. 4. TREATMENT OF PRIVATE FOUNDATION ADMINIS-
TRATIVE EXPENSES PAID TO DISQUALIFIED 
PERSONS. 
(a) IN GENERAL.—Section 4942(g) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(5) DISALLOWANCE OF ADMINISTRATIVE EX-
PENSES PAID TO DISQUALIFIED PERSONS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), administrative expenses paid to 
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any person described in subparagraph (B) shall 
not be treated as a qualifying distribution. 
‘‘(B) PERSON
DESCRIBED.—A person is 
described in this subparagraph if such person is 
a disqualified person (as defined in section 
4946(a)(1)) with respect to the private founda-
tion, other than a foundation manager (as de-
fined in section 4946(b)(1)) of such private 
foundation who is not a member of the family 
(as defined in section 4946(d)) of any indi-
vidual described in subparagraph (A) or (C) of 
section 4946(a)(1).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 5. TREATMENT OF DISTRIBUTIONS TO DONOR AD-
VISED FUNDS FROM PRIVATE FOUNDATIONS. 
(a) PROHIBITION ON TREATMENT AS QUALIFYING 
DISTRIBUTIONS.— 
(1) IN GENERAL.—Section 4942(g)(1)(A) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘paragraph (3), or’’ and inserting ‘‘paragraph 
(3), or (iii) a sponsoring organization (as defined in 
section 4966(d)(1)) if such contribution will be held 
in a donor advised fund (as defined in section 
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4966(d)(2)), except as provided in paragraph (3), 
or’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
4942(g)(3) is amended by striking ‘‘(i) or (ii)’’ and 
inserting ‘‘(i), (ii), or (iii)’’. 
(b) REPORTING.—Section 6033(c) of the Internal 
Revenue Code of 1986 is amended— 
(1) by redesignating paragraphs (1) and (2) as 
paragraphs (2) and (3), respectively, 
(2) by inserting before paragraph (2) (as redes-
ignated) the following new paragraph: 
‘‘(1) the private foundation shall include in its 
annual return under this section information on— 
‘‘(A) the amount of any contribution to a 
sponsoring organization (as defined in section 
4966(d)(1)) which will be held in a donor ad-
vised fund (as defined in section 4966(d)(2)), 
‘‘(B) the sponsoring organization to which 
such contribution was made, and 
‘‘(C) the donation advice given to such or-
ganization (if any),’’, and 
(3) in the matter following paragraph (3) (as 
redesignated) by striking ‘‘paragraph (1)’’ and in-
serting ‘‘paragraph (2)’’. 
(c) EFFECTIVE DATES.— 
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(1) PROHIBITION.—The amendment made by 
subsection (a) shall apply to distributions made after 
December 31, 2021. 
(2) REPORTING.—The amendments made by 
subsection (b) shall apply to returns required to be 
filed after December 31, 2021. 
SEC. 6. TREATMENT OF CONTRIBUTIONS FROM DONOR AD-
VISED FUNDS FOR PURPOSES OF DETER-
MINING PUBLIC SUPPORT. 
(a) PRIVATE FOUNDATIONS.—Section 509 of the In-
ternal Revenue Code of 1986 is amended by adding at the 
end the following new subsection: 
‘‘(g) SPECIAL RULES FOR SUPPORT FROM DONOR 
ADVISED FUNDS.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(2), except as otherwise provided in this sub-
section, all amounts received from sponsoring orga-
nizations (as defined in section 4966(d)(1))— 
‘‘(A) shall not be treated as support re-
ceived from an organization described in section 
170(b)(1)(A), and 
‘‘(B) shall be treated as support received 
from one person. 
‘‘(2) EXCEPTION WHERE DONOR IDENTIFIED.— 
In the case of support from a sponsoring organiza-
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tion which is provided from funds which are identi-
fied with a donor to a donor advised fund (as de-
fined in section 4966(d)(2)) and the sponsoring or-
ganization identifies such donor, such support shall 
be treated as provided by such donor. 
‘‘(3) EXCEPTION FOR AMOUNTS NOT CONTRIB-
UTED
FROM
DONOR
ADVISED
FUNDS.—Paragraph 
(1) shall not apply to any amount if the sponsoring 
organization specifies that— 
‘‘(A) the amount is not a distribution from 
a donor advised fund (as so defined), and 
‘‘(B) no donor (or any person appointed or 
designated by such donor) had advisory privi-
leges with respect to the provision of the sup-
port.’’. 
(b) DETERMINATION
OF CONTRIBUTION LIMITA-
TIONS.—Section 170(b)(1)(A) of such Code is amended by 
adding at the end the following: ‘‘For purposes of clause 
(vi), rules similar to the rules of section 509(g) shall 
apply.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made in taxable 
years beginning after the date of the enactment of this 
Act. 
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SEC. 7. EXEMPTION FROM TAX ON INVESTMENT INCOME 
FOR CERTAIN PRIVATE FOUNDATIONS MAK-
ING 
SIGNIFICANT 
QUALIFYING 
DISTRIBU-
TIONS. 
(a) IN GENERAL.—Section 4940 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) EXEMPTION FOR FOUNDATIONS MAKING SIG-
NIFICANT QUALIFYING DISTRIBUTIONS.—No tax shall be 
imposed by this section for any taxable year on any private 
foundation if such private foundation makes qualifying 
distributions (as defined in section 4942(g)) during such 
taxable year in an amount that is not less than 7 percent 
of the excess of— 
‘‘(1) the aggregate fair market value of all as-
sets of the foundation (other than those which are 
used (or held for use) directly in carrying out the 
foundation’s exempt purpose) determined as of the 
first date of the taxable year, over 
‘‘(2) the acquisition indebtedness with respect 
to 
such 
assets 
(determined 
under 
section 
514(c)(1)).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 8. EXEMPTION FROM TAX ON INVESTMENT INCOME 
OF LIMITED-DURATION PRIVATE FOUNDA-
TIONS. 
(a) IN GENERAL.—Section 4940 of the Internal Rev-
enue Code of 1986, as amended by section 7, is amended 
by adding at the end the following new subsection: 
‘‘(f) EXEMPTION FOR LIMITED-DURATION FOUNDA-
TIONS.— 
‘‘(1) EXEMPTION.— 
‘‘(A) IN GENERAL.—No tax shall be im-
posed by subsection (a) on any private founda-
tion if such private foundation meets the re-
quirements of subparagraph (B). 
‘‘(B) REQUIREMENTS.—A private founda-
tion meets the requirements of this subpara-
graph if, at the time of its establishment and 
at all times thereafter— 
‘‘(i) such private foundation has a du-
ration specified in its governing documents 
of not more than 25 years, and 
‘‘(ii) such private foundation makes 
no distributions to disqualified private 
foundations. 
‘‘(C) DISQUALIFIED
PRIVATE
FOUNDA-
TION.—For purposes of this subsection, the 
term disqualified private foundation means, 
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with respect to the private foundation described 
in subparagraph (B), another private founda-
tion with respect to which there is a disqualified 
person who is also a disqualified person with re-
spect to such private foundation described in 
subparagraph (B). 
‘‘(2) RECAPTURE TAX.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) no tax is imposed under sub-
section (a) on a private foundation by rea-
son of paragraph (1), and 
‘‘(ii) such private foundation— 
‘‘(I) fails to meet the require-
ments of paragraph (1)(B) in any 
subsequent taxable year, 
‘‘(II) has a duration of more 
than 25 years, or 
‘‘(III) makes a distribution to a 
disqualified private foundation, 
a tax shall be imposed on such foundation 
in the amount determined under subpara-
graph (B) for the first taxable year in 
which such private foundation is described 
in clause (ii). 
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‘‘(B) AMOUNT OF TAX.—The amount of 
tax determined under this subparagraph is the 
aggregate amount of taxes which would have 
been imposed on such private foundation for all 
taxable years before the first taxable year in 
which such foundation was described in sub-
paragraph (A)(ii) if paragraph (1) had not ap-
plied.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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