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‘‘(A) IN GENERAL.—The term ‘disqualified 
supporting organization’ means, with respect to 
any distribution—
‘‘(i) any type III supporting organiza-
tion (as defined in section 4943(f)(5)(A)) 
which is not a functionally integrated type 
III supporting organization (as defined in 
section 4943(f)(5)(B)), and 
‘‘(ii) any organization which is de-
scribed in subparagraph (B) or (C) if—
‘‘(I) the donor or any person des-
ignated by the donor for the purpose 
of advising with respect to distribu-
tions from a donor advised fund (and 
any related parties) directly or indi-
rectly controls a supported organiza-
tion (as defined in section 509(f)(3)) 
of such organization, or 
‘‘(II) the Secretary determines by 
regulations that a distribution to such 
organization otherwise is inappro-
priate. 
‘‘(B) TYPE I AND TYPE II SUPPORTING OR-
GANIZATIONS.—An organization is described in 
this subparagraph if the organization meets the
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requirements of subparagraphs (A) and (C) of 
section 509(a)(3) and is—
‘‘(i) operated, supervised, or controlled 
by one or more organizations described in 
paragraph (1) or (2) of section 509(a), or 
‘‘(ii) supervised or controlled in con-
nection with one or more such organiza-
tions. 
‘‘(C) FUNCTIONALLY
INTEGRATED
TYPE 
III SUPPORTING ORGANIZATIONS.—An organiza-
tion is described in this subparagraph if the or-
ganization is a functionally integrated type III 
supporting organization (as defined under sec-
tion 4943(f)(5)(B)). 
‘‘SEC. 4967. TAXES ON PROHIBITED BENEFITS. 
‘‘(a) IMPOSITION OF TAXES.—
‘‘(1) ON THE DONOR, DONOR ADVISOR, OR RE-
LATED PERSON.—There is hereby imposed on the 
advice of any person described in subsection (d) to 
have a sponsoring organization make a distribution 
from a donor advised fund which results in such per-
son or any other person described in subsection (d) 
receiving, directly or indirectly, a more than inci-
dental benefit as a result of such distribution, a tax 
equal to 125 percent of such benefit. The tax im-
873
posed by this paragraph shall be paid by any person 
described in subsection (d) who advises as to the dis-
tribution or who receives such a benefit as a result 
of 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 
such distribution would confer a benefit described in 
paragraph (1), a tax equal to 10 percent of the 
amount of such benefit. The tax imposed by this 
paragraph shall be paid by any fund manager who 
agreed to the making of the distribution. 
‘‘(b) EXCEPTION.—No tax shall be imposed under 
this section with respect to any distribution if a tax has 
been imposed with respect to such distribution under sec-
tion 4958. 
‘‘(c) SPECIAL RULES.—For purposes of subsection 
(a)—
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more 
than one person is liable under paragraph (1) or (2) 
of subsection (a) with respect to a distribution de-
scribed in subsection (a), all such persons shall be 
jointly and severally liable under such paragraph 
with respect to such distribution.
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‘‘(2) LIMIT FOR MANAGEMENT.—With respect 
to any one distribution described in subsection (a), 
the maximum amount of the tax imposed by sub-
section (a)(2) shall not exceed $10,000. 
‘‘(d) PERSON DESCRIBED.—A person is described in 
this subsection if such person is described in section 
4958(f)(7) with respect to a donor advised fund.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 4963 is amended by inserting 
‘‘4966, 4967,’’ after ‘‘4958,’’ each place it appears 
in subsections (a) and (c). 
(2) The table of subchapters for chapter 42 is 
amended by adding at the end the following new 
item:
‘‘SUBCHAPTER G. DONOR ADVISED FUNDS’’.
(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. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING 
DONOR ADVISED FUNDS AND SPONSORING 
ORGANIZATIONS. 
(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 a comma, and by