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Abstract: 

In the Pension Protection Act of 2006 (PPA), Congress included several provisions that have absolutely nothing to do with pensions. Some of these new provisions apply to charitable organizations. The excess business holdings tax under IRC §4943, previously only applicable to private foundations, now also applies to all donor-advised funds (DAFs), and to Type II supporting organizations where the persons (or their families) controlling the supporting organization also control the supported organization, as well as to Type III supporting organizations that are not “functionally integrated” with the operation of a supported organization (collectively, “Affected SO”). The PPA provides that only the DAF or Affected SO is treated as a private foundation, not the sponsoring organization.

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