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Donor Advised Fund (DAF) and Managed Aggregate Account (MAA) Overview

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Donor Advised Fund (DAF) and Managed Aggregate Account (MAA) Overview
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Donor Advised Fund (DAF)

What is it?

An account maintained and operated by a 501(c)(3) organization (sponsoring organization). 

- CG partners with the Charities Aid Foundation of America (CAFA) 

The account is composed of contributions made by individual donors. Although CAFA has legal control over the monies in the account, the client has advisory privileges with respect to where the funds are distributed

Why do we use it?

It is the most efficient and cost-effective way to conduct grant-making.

Donor Advised Funds are becoming the most sought-after way for corporations to manage their philanthropic goals.

Clients mitigate risk and repetitional exposure by allowing CG and CAFA to conduct their industry-leading due diligence reviews of all organizations paid through the DAF.

How do we use it?

The DAF is our primary vehicle used to disburse funds to charities.

- This account is owned by CAFA and is managed by CyberGrants.

The most common tax statuses are eligible to be paid through the DAF and make 97% of the funds flow

For those organizations ineligible to be paid through the DAF (based on their tax status), we utilize the Managed Aggregate Account to process the remaining 3%

 

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Tax Statuses Eligible for the DAF

Tax Status

Description

170(b)(1)(a)(i)Church
170(b)(1)(a)(ii)School
170(b)(1)(a)(iii)Hospital or medical research organization
170(b)(1)(a)(iv)Organization which operates for benefit of college or university and is owned or operated by a governmental unit
170(b)(1)(a)(v)Governmental unit
170(b)(1)(a)(vi)Organization which receives a substantial part of its support from a governmental unit or the general public
509(a)(2)Organization that normally receives no more than one-third of its support from gross investment income and unrelated business income and at the same time more than one- third of its support from contributions, fees, and gross receipts related to exempt purposes.
NCES Public SchoolPublic elementary and secondary schools as listed by the U.S. Department of Education's National Center For Education Statistics (NCES).
NCES School DistrictPublic school districts as listed by the U.S. Department of Education's National Center For Education Statistics (NCES).

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Managed Aggregate Account (MAA)

What is it?

 - CyberGrants SPV, LLC is its own company (CyberGrants SPV) operating with its own EIN as an LLC that is a wholly owned subsidiary of CyberGrants, LLC.

- CyberGrants SPV is set up as an SPV (Special Purpose Vehicle) which is a bankrupt remote entity when established as a wholly owned subsidiary, meaning that in the event CyberGrants were to become insolvent and file bankruptcy (this is highly unlikely) the monies held by CyberGrants SPV would not be available to creditors seeking repayment of debts.

- CyberGrants SPV has an outside director (board member) who is responsible for ensuring that under any circumstance, particularly insolvency - there is not an interruption to the intended recipients receiving money from the donors.

- CyberGrants and CyberGrants SPV ensure absolute seamless clarity on the intention of the donation and the status of the donation to both the donor and the intended recipient during the entirety of the transaction, from original donation to receipt of payment.

Why do we use it?

CyberGrants SPV has a charter to serve as a conduit in the transaction of getting money from the donors to the intended recipients.

CyberGrants SPV is designed and intended to be an extremely safe but necessary conduit in a financial transaction between donors and their intended charitable recipients when those recipients are not eligible for payment through our DAF partner.

How do we use it?

The MAA is our secondary vehicle used to disburse funds to charities

For those tax statuses unable to be paid through the DAF, the MAA is utilized to facilitate payment

While we want to ensure that all organizations are included, we will not disburse funds to NPOs who are non-verifiable in the IRS.

 

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Tax Statuses Eligible for the MAA

Tax StatusDescription
4940(D)(2)Private operating foundation exempt from paying excise taxes or investment income
4942(J)(3)Private operating foundation (other)
509(a)Private nonoperating foundation
509(a)(3) 
509(a)(3) - Type I509(a)(3) - Type I
509(a)(3) - Type II509(a)(3) - Type II
509(a)(3) - Type III functionally integrated509(a)(3) - Type III functionally integrated
509(a)(3) - Type III not functionally integrated509(a)(3) - Type III not functionally integrated
509(a)(4)Organization organized and operated to test for public safety
1381(a)(2)Taxable Farmer's Cooperative
4947(a)(1)Non-exempt charitable trust (Public Charity)
4947(a)(2)Non-exempt charitable trust
501(c)(1)Corporations Organized under Act of Congress (including Federal Credit Unions)
501(c)(10) Domestic Fraternal Societies
501(c)(11)Teachers' retirement fund associations
501(c)(12)Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations
501(c)(13)Cemetery Companies
501(c)(14)Credit Unions and Other Mutual Financial Organizations
501(c)(15)Mutual insurance companies
501(c)(16)Corporations organized to finance crop operations
501(c)(17) Supplemental Unemployment Benefit Trusts
501(c)(18)Employee-funded pension trusts created before June 25, 1959
501(c)(19)Veterans' Organizations
501(c)(2) Title-Holding Corporations for Single Parents
501(c)(20)Group Legal Services Plan Organizations
501(c)(21)Black Lung Benefit Trusts
501(c)(22)Withdrawal liability payment fund
501(c)(23)Veterans' organizations created before 1880 Trusts as described in section 4049 of the Employee Retirement Income Security Act of 1974 (as in effect on the date of the enactment of the Single-Employer Pension Plan Amendments Act of 1986).
501(c)(24)Title-Holding Corporations or Trusts for Multiple Parents
501(c)(25)State-Sponsored High-Risk Health Coverage Organizations
501(c)(26)State-Sponsored Workers' Compensation
501(c)(27)Reinsurance Organizations
501(c)(28)National railroad retirement investment trust
501(c)(4)Civic Leagues and Social Welfare Organizations
501(c)(5)Labor, Agricultural, and Horticultural Organizations
501(c)(6)Business Leagues, Etc.
501(c)(7)Social and Recreation Clubs
501(c)(8) Fraternal Beneficiary Societies
501(c)(9)Voluntary Employees' Beneficiary Associations
501(d)Apostolic and religious organization
501(e)Cooperative Hospital Service organization
501(f)Cooperative service organizations of operating education organizations
501(k)Child care under 501(k)
501(n) Charitable Risk Pool
521Farmer's Cooperative
529Qualified State-Sponsored Tuition Program
82IRC 527 Political Organization
NCES Private SchoolPrivate elementary and secondary schools as listed by the U.S. Department of Education's National Center For Education Statistics (NCES).
US Governmental EntityUS governmental entities - e.g. cities/towns, police, fire, libraries, parks, etc. - that are not otherwise present in the IRS Business Master File. Reserved for manually verified organizations only.

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Identifying DAF vs. MAA Payments

  • After you complete gift approvals/schedule grant payments, on the first Wednesday of the month, the system will automatically review the transactions and create the payments and payment batches.
  • The system will review the payments within the batches and determine which organizations will be put into the DAF invoice vs. the MAA invoice. The tax status of the organization will make this determination automatically.

Example:

Susan gives $100 to the American National Red Cross and $100 to her local charter school.

AMERICAN NATIONAL RED CROSS

4249 SW 29th and Meridian

Oklahoma City, OK 73179 United States

Tax Status: 501(c)(3) / 170(B)(1)(a)(vi)

U.S. Tax ID/EIN: 53-0196605

 

CHARTER SCHOOL OF MORGAN HILL FOUNDATION

9530 MONTEREY RD

MORGAN HILL, CA 95037-9356

United States

Tax Status: 501(c)(3) / 509(a)(3) - Type I

U.S. Tax ID/EIN: 460905894

 

- The gifts are approved by an admin and the payments are created the beginning of the month

- The system will then review these organizations and see that ARC has a tax status of 170(b)(1)(a)(vi) and the charter school is 509(a)(3) – Type I

 

The system will place the ARC payment in the DAF Invoice and place the charter school payment in the MAA Invoice because it does NOT meet the DAF tax status requirements

 

 

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Proposal Type Eligibility & Disbursement Vehicle

  • Disbursement Vehicle does not override proposal type eligibility
  • If your program does not allow a particular tax status, that tax status will still be ineligible when paying out through CGDS
  • When the system makes its determination for DAF vs. MAA invoice, it is adhering to your existing tax statuses allowable for your proposal type(s).

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Back to DAF and MAA Details Section

 

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