You can recommend any amount you choose. The grants that do the most good are sized in a conversation with the people who will receive them: what they can absorb, what they need it for, what their books require, and, for small charities, what a large gift does to their standing with the IRS. One phone call before the grant, and the money lands the way you meant it.
Six Things the Charity Knows That You Do Not
None of them are reasons to give less. All of them are reasons to give on purpose.
Capacity
A grant that is a rounding error for one charity changes the year for another. Ask what a gift this size would let them do, and whether monthly serves them better than a lump.
Restricted or unrestricted
Unrestricted operating support is usually the most useful and the least paperwork. If you want it tied to a program, say so before the grant, not after.
Eligibility
The sponsor grants only to public charities. Not private foundations, not certain supporting organizations. Ten minutes with their EIN saves a rejected grant.
Their reporting
A non-church charity lists large donors on its Form 990 donor schedule. A DAF grant lists the sponsor, not you. Some donors prefer that; the charity should know either way.
Pledges
A DAF grant cannot pay a pledge you personally made. Speak in intentions ("we plan to recommend"), never promises.
Tipping
Small non-church charities have a public support test. A very large personal gift can lean on it. A grant from a DAF sponsor counts as public support in full under current rules, and churches are exempt from the test entirely.
A Correction Worth Making
Owners sometimes worry that a large grant will hit the charity with tax on “unrelated business income.” It will not. That tax reaches a charity running a business outside its mission, like leasing its parking lot commercially. A grant is a contribution, never business income, at any size. The thing a small charity actually watches is its public support test: a third of its support over five years has to come from the public, and one donor’s gifts count only up to 2% of the total. A grant from your donor-advised fund comes from the sponsoring charity, so under current rules it counts as public support in full. Churches are not subject to the test at all.
Walk In With the Numbers
Enter what you have in mind and who it is for. It sizes the grant against their year, answers the tipping question, and hands you five questions to ask. Nothing is stored or sent.
What You Have in Mind, Before the Conversation
Round numbers. The charity’s yearly budget is public for most non-church charities (their Form 990); for a church, ask.
$50,000 is about 8.3% of a $600,000 yearly budget: a meaningful line in their year. Ask what it would let them do that they cannot do today.
Education only; a conversation aid, not tax advice. The charity’s accountant and your CPA confirm the specifics.
Through a DAF, the Public Support Question Does Not Arise
A grant from a donor-advised fund comes from the sponsoring charity, a public charity itself, so under current IRS rules it counts as public support in full. The tipping question does not arise for this grant today. (The IRS proposed treating DAF grants as the donor’s in 2017; that proposal was never finalized, and your CPA will know if it changes.)
It Is Never Unrelated Business Income
Gifts and grants are contributions, not business income, no matter the size. The unrelated business income tax reaches a charity that runs a trade or business outside its mission, not one that receives a generous grant. The reasons to talk first are capacity, restrictions, eligibility, and reporting, not audits.
- Is unrestricted operating support the most useful form, or is there a program you want it tied to?
- Does $4,167 a month serve you better than $50,000 at once, and which month should it start?
- Are you a public charity the sponsor can grant to (not a private foundation or a supporting organization)? What is your EIN?
- Will a grant this size appear on your Form 990 donor schedule, and does it matter to you that the sponsor, not I, is the listed donor?
- Is there anything I have promised or pledged that this grant must not be used to pay? (A DAF grant cannot fulfil a personal pledge.)
Give With the People, Not Just to Them
Pre-tilling sets the schedule; Hand in Hand with Purpose sets the amount. Both are deliverables of The 7-Day Seed, and both start with a free orientation call.
Education only; not tax, legal, or investment advice, for you or for any charity. Public support and reporting rules are summarized in general terms and change; the charity’s accountant and your CPA confirm the specifics. Grants are recommendations the sponsoring charity approves under its own policies, to eligible charities only, and may not benefit you or fulfil a personal pledge. Kingdom Portfolios is not a DAF sponsor, never receives, holds, or invests charitable dollars, and receives no compensation from any sponsor or charity.