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donor advised fund shall be valued in an amount
equal to the sum of—
‘‘(A) the value of such asset claimed by the
donor for purposes of determining the donor’s de-
duction under section 170, 2055, or 2522 with
respect to such transfer and reported by the
donor to the sponsoring organization (in any
manner specified by the Secretary), and
‘‘(B) an assumed annual rate of return of
5 percent of such value.
‘‘(4) Any illiquid asset purchased by such fund
shall be valued in an amount equal to—
‘‘(A) the purchase price paid for such asset
by such fund, and
‘‘(B) an assumed annual rate of return of
5 percent of such value.
‘‘(g) SPONSORING ORGANIZATION; DONOR ADVISED
FUND.—For purposes of this subchapter—
‘‘(1) SPONSORING
ORGANIZATION.—The term
‘sponsoring organization’ means any organization
which—
‘‘(A) is described in section 170(c) (other
than in paragraph (1) thereof, and without re-
gard to paragraph (2)(A) thereof), and
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‘‘(B) maintains 1 or more donor advised
funds.
‘‘(2) DONOR ADVISED FUND.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘donor advised fund’
means a fund or account—
‘‘(i) which is separately identified by
reference to contributions of a donor or do-
nors,
‘‘(ii) which is owned and controlled by
a sponsoring organization, and
‘‘(iii) with respect to which a donor or
any person appointed or designated by such
person) has, or reasonably expects to have,
advisory privileges with respect to the dis-
tribution or investment of amounts held in
such fund or account by reason of the do-
nor’s status as a donor.
‘‘(B) EXCEPTION.—The term ‘donor advised
fund’ shall not include any fund or account with
respect to which a person described in subpara-
graph (A)(iii) advises as to which individuals
receive grants for travel, study, or other similar
purposes, but only if—
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‘‘(i) such person’s advisory privileges
are performed exclusively by such person in
the person’s capacity as a member of a com-
mittee appointed by the sponsoring organi-
zation,
‘‘(ii) no combination of persons de-
scribed in subparagraph (A)(iii) (or persons
related to such persons) control, directly or
indirectly, such committee, and
‘‘(iii) all grants from such fund or ac-
count satisfy requirements similar to those
described in section 4945(g) (concerning
grants to individuals by private founda-
tions).
‘‘(C) SECRETARIAL AUTHORITY.—The Sec-
retary may exempt a fund or account from treat-
ment as a donor advised fund which—
‘‘(i) is advised by committee not di-
rectly or indirectly controlled by the donor
or advisor (and any related parties), or
‘‘(ii) will benefit a single identified or-
ganization or governmental entity or a sin-
gle identified charitable purpose.
‘‘(h) OTHER DEFINITIONS.—For purposes of this
section—
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‘‘(1) TAXABLE PERIOD.—The term ‘taxable pe-
riod’ means, with respect to the undistributed amount
for any taxable year, the period beginning with the
first day of the taxable year and ending on the earlier
of—
‘‘(A) the date of mailing of a notice of defi-
ciency with respect to the tax imposed by sub-
section (a) under section 6212, or
‘‘(B) the date on which the tax imposed by
subsection (a) is assessed.
‘‘(2) APPLICABLE PERIOD.—The term ‘applicable
period’ means, with respect to any donor advised
fund of any sponsoring organization, a 3-consecutive
taxable year period determined under the following
rules:
‘‘(A) The first applicable 3-consecutive tax-
able year period for any donor advised fund
shall begin on the first day of the first taxable
year of the sponsoring organization beginning
after the date such fund has been in existence for
1 year.
‘‘(B) Any applicable 3-consecutive taxable
year period after the first such period shall begin
on the day after the termination of any pre-
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ceding applicable 3-consecutive taxable year pe-
riod with respect to such donor advised fund.
‘‘(i) REGULATIONS.—The Secretary may issue such
regulations as are necessary to carry out the purposes of
this section, including regulations regarding—
‘‘(1) the acceptable methods for calculating the
organization level undistributed amount for spon-
soring organizations,
‘‘(2) the allowable adjustments in the determina-
tion of the value of any illiquid asset where the asset
value has declined significantly after a contribution
to, or purchase by, the donor advised fund, and
‘‘(3) the treatment or disregard of transactions
designed to avoid the application of the illiquid asset
rules, such as through exchanges of illiquid assets for
other assets.
‘‘SEC. 4968. TAXES ON PROHIBITED DISTRIBUTIONS.
‘‘(a) IMPOSITION OF TAXES.—
‘‘(1) ON THE DONOR OR DONOR ADVISOR.—There
is hereby imposed on the advice of any person de-
scribed in section 4967(g)(2)(A)(iii) to have a spon-
soring organization of a donor advised fund make a
taxable distribution from such fund a tax equal to 20
percent of the amount thereof. The tax imposed by
this paragraph shall be paid by such person who ad-