Intermediate Sanctions

Donor-advised funds

The IRS has struggled with donor-advised funds. This type of fund is one that's within a public charity where the donors have the ability to make recommendations as to the investment policy of the fund and the making of grants from the fund.

Q: Does this situation cause the donor to become a disqualified person?

A: Both the donors and the donor advisors are disqualified persons with respect to the donor-advised fund. This also includes family members, as described earlier in this course.

Organization manager

An organization manager is a trustee, director, or officer of the tax-exempt organization (or someone with similar responsibilities regardless of the specific title).

A person is an organization manager if they:

• are so designated under the articles of incorporation, constitution, trust agreement, or other documents of the organization

• OR

• regularly exercises general authority to make administrative or policy decisions on behalf of the organization

The distinction between a disqualified person and an organization manager is important in the imposition of penalties for an excess benefit transaction. In fact, a person may be a disqualified person AND an organization manager and have taxes due as each.

Outside advisors. The regulations make it clear that outside advisors such as accountants, attorneys, and compensation consultants are NOT considered organization managers.

Committee membership. Any person that serves on an organization committee that's attempting to invoke the rebuttable presumption of reasonableness (to be discussed later) on the basis of the actions of the committee is an organization manager for this purpose.