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‘‘(B) 2.5 percent of the greater of—
‘‘(i) the average of the sponsoring orga-
nization’s required minimum initial con-
tribution amount for such period, or
‘‘(ii) the average of the sponsoring or-
ganization’s required minimum balance for
such period,
for the type of donor with respect to such donor
advised fund.
‘‘(3) ILLIQUID FUND DISTRIBUTABLE AMOUNT.—
The term ‘illiquid fund distributable amount’ means,
with respect to any illiquid asset donor advised fund
of any sponsoring organization for any taxable year,
an amount equal to the applicable percentage of the
value of the assets in such fund as determined at the
end of the preceding taxable year.
‘‘(4) APPLICABLE
PERCENTAGE.—For purposes
of paragraphs (1) and (3), the applicable percentage
is—
‘‘(A) 3 percent for the first taxable year be-
ginning after the date of the enactment of this
section,
‘‘(B) 4 percent for the second taxable year
beginning after such date, and
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‘‘(C) 5 percent for any taxable year begin-
ning after the second taxable year beginning
after such date.
‘‘(e) QUALIFYING DISTRIBUTION.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The term ‘qualifying dis-
tribution’ means—
‘‘(A) any amount paid by the sponsoring
organization from a donor advised fund—
‘‘(i) to any organization described in
section 170(b)(1)(A) (other than any orga-
nization described in section 509(a)(3) or
any sponsoring organization if such amount
is for maintenance in a donor advised
fund), and
‘‘(ii) notwithstanding clause (i), to any
organization 
described 
section
170(f)(17)(B)(ii), but only to the extent not
prohibited by regulations, and
‘‘(B) any amount set aside in such donor
advised fund for purposes, and under procedures
similar to those, described in section 4942(g)(2).
Such term shall also include any amount paid during
any taxable year for reasonable and necessary admin-
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istrative expenses charged to a donor advised fund by
a sponsoring organization.
‘‘(2) DISTRIBUTIONS TO SPONSORING ORGANIZA-
TIONS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), such term shall include any
distribution to a sponsoring organization.
‘‘(B) 
ORGANIZATION
LEVEL
DISTRIBU-
TIONS.—For purposes of subsection (c)(1)(B),
such term shall not include any distribution to
a sponsoring organization unless such distribu-
tion is designated for use in connection with a
charitable program of such organization.
‘‘(3) PURPOSE OF DISTRIBUTION.—Each quali-
fying distribution shall be taken into account in de-
termining whether each of the requirements of para-
graphs (1), (2), and (3) of subsection (a) are met, ex-
cept that only qualifying distributions from a donor
advised fund shall be taken into account in deter-
mining whether the requirements of paragraphs (2)
and (3) of subsection (a) are met with respect to the
fund.
‘‘(4) DESIGNATION OF TAXABLE YEAR.—
‘‘(A) IN GENERAL.—A sponsoring organiza-
tion shall designate the taxable years or applica-
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ble periods with respect to which any qualifying
distribution shall be applied for purposes of sat-
isfying the distribution requirements of such tax-
able year or applicable period.
‘‘(B) CARRYOVER OF EXCESS DISTRIBUTION
DESIGNATIONS.—If a sponsoring organization
designates an amount of qualifying distributions
in excess of the amount necessary to meet the dis-
tribution requirements for all taxable years and
all applicable periods, the sponsoring organiza-
tion may designate such excess as a carryover
distribution which may be applied for purposes
of satisfying the distribution requirements of the
succeeding 5 taxable years.
‘‘(f) VALUATION RULES.—For purposes of determining
the value of any asset held by a donor advised fund, the
following rules shall apply:
‘‘(1) Securities for which market quotations are
readily available shall be valued at fair market value
determined on a monthly basis.
‘‘(2) Cash shall be determined on an average
monthly basis.
‘‘(3) Any illiquid asset transferred by a donor to
a sponsoring organization for maintenance in such