p. 254, note 165. Insert following existing text:
An individual selling religious merchandise by means of the internet was found liable for federal income tax on the net proceeds, with a court rejecting his argument that he was functioning as a church (Lloyd v. Comm'r, T.C. Memo. 2020‐92 (2020).
§ 10.3 CHURCHES AND SIMILAR INSTITUTIONS
(c) Principle of Respect for Autonomy
p. 262, note 219, second line. Insert following third period:
The Court expanded the ministerial exception to encompass teachers employed by religious schools (Our Lady of Guadalupe School v. Morrissey‐Berru; St. James School v. Darryl Biel, 140 S. Ct. 2049).
§ 10.5 INTEGRATED AUXILIARIES OF CHURCHES
p. 263, note 233. Delete 26.9 and insert 26.11.
§ 10.7 RELIGIOUS ORDERS
p. 266. Insert as second complete paragraph, before heading:
A tax‐exempt religious organization is inspired by Christian ideals and structured around daily religious observations and celebrations of festivals of the Christian year. This entity is dedicated to the care and well‐being of adults with developmental disabilities—its residents. The community also includes members who care for the residents and the members' children. These three categories of individuals live together on a full‐time basis in extended family households and work together maintaining the community. Members are individuals who have been in continuous residence at the organization's facility for at least three years, completed a course of studies, completed a discernment process regarding the suitability of their intended permanent commitment to the community, and been accepted into permanent residence at the community. Members agree to strive to live in accordance with ideals requiring moral and spiritual self‐sacrifice and dedication to the organization's goals, at the expense of their material well‐being. The IRS ruled that this organization is a religious order, even though it is not under the control and supervision of a church or convention or association of churches.252.1
Notes
1 27.1 Espinoza v. Montana Department of Revenue, 140 S. Ct. 2246 (2020).
2 252.1 Priv. Ltr. Rul. 201904008.
CHAPTER ELEVEN Other Types of Charitable Organizations
§ 11.2 Amateur Sports Organizations
§ 11.8 Donor‐Advised Funds (c) Portrait of Donor‐Advised Fund Universe
§ 11.9 Endowment Funds (b) College and University Endowment Tax
§ 11.2 AMATEUR SPORTS ORGANIZATIONS
p. 273, note 18. Delete last sentence and insert:
The IRS ruled that an entity conducting outboard motor boat races (without the participation of amateur athletes) open to the public and an entity conducting professional rodeos are not qualified amateur sports organizations (Priv. Ltr. Ruls. 201933016, 201706019).
§ 11.8 DONOR‐ADVISED FUNDS
p. 281. Insert following second complete paragraph, before heading:
(c) Portrait of Donor‐Advised Fund Universe
An analysis of donor‐advised funds, examining data for 2014–2018 from 989 sponsoring organizations, was issued in late 2019.96.1 A letter introducing this report states that “[o]ver the past decade, donor‐advised funds have experienced tremendous growth.” The letter highlights three extraordinary developments. One is that “grantmaking from donor‐advised funds to qualified charities has nearly doubled in the past five years.” Grants from DAFs in 2018 totaled $23.42 billion. Two, there has been an 86 percent increase in contributions to the funds over the past five years. The number for 2018 is $37.12 billion. Three, for the second year in a row, “there was growth above 50 percent in the number of new donor‐advised fund accounts.”
Total estimated charitable contributions in the United States in 2018 were $427.71 billion (see the September 2019 issue). Of this amount, $292.09 billion came from individuals (68 percent). Thus, donors to donor‐advised funds accounted for 12.7 percent of individual giving. Contributions to DAFs expressed as a percentage of total annual individual giving have steadily increased during 2010–2018.
There were an estimated 728,563 donor‐advised funds in 2018, compared to about 80,000 private foundations (not including corporate foundations). Assets in donor‐advised funds in 2018 had an estimated value of $121.42 billion, while at the same time assets in private foundations had an estimated value of $872.65 billion. Yet grants from donor‐advised funds in 2018 (as noted, $23.42 billion) equated to just over 43 percent of the estimated $54.03 billion granted by private foundations during the year.
Contributions to donor‐advised funds in 2018 increased by 20.1 percent in relation to the total for 2017. Grants from these funds to charitable entities amounted to an 18.9 percent increase from the total for 2017. Assets under management in donor‐advised funds increased by 8.3 percent compared to the value in 2017. The number of these funds “increased sharply,” rising by 55.2 percent in 2018. The payout rate for donor‐advised funds in 2018 was 20.9 percent.
The average size of a donor‐advised fund in 2018 is estimated to be $166,653. This is a 30.2 percent decrease compared to the 2017 number ($238,857). The NPT report states that the “emergence of workplace giving donor‐advised fund accounts and sponsoring organizations that have no or low contribution minimums will continue to drive down the average donor‐advised fund size.”
The NPT report includes a comparison of donor‐advised funds from the standpoint of type of sponsoring organization. Noting that there are about 1.33 million “registered” public charities in the United States, the charities tracked in the report comprise less than 1/10th of 1 percent of these organizations. The report offers this overview: (1) the number of donor‐advised funds sponsored by national charities exceeds the number of accounts at the other two types of sponsoring organizations combined, (2) the national charities have higher aggregate charitable asset values and distribute more grant dollars, (3) the average donor‐advised fund asset size at community foundations is higher than at the other two types of sponsoring organizations, and (4) single‐issue charity sponsors have the highest payout rate.
The NPT report includes data from 54 national charities.
