Almost all charitable organizations have one thing in common. They rely on donor support to carry out their tax-exempt purposes. However, attracting donors and receiving sufficient funds to continue operations year-to-year is often challenging and timeconsuming, requiring valuable resources that an organization might or might not have. Following is a guide for charitable organizations that want to elevate their pitch to potential donors by highlighting the tax planning benefits available to your charitable organization and the donor.

Income Tax vs. Estate Tax

It is important to understand which type of tax most concerns the donor. In most instances, it will be the immediate benefits: “Will I get an income tax deduction from this donation, and how much will it save me in income taxes?” But focusing solely on the immediate benefits ignores the value of a proper charitable giving provision within an estate plan.

The donors most sought after, those with significant assets, likely have an estate that is or will be subject to estate tax. With the current estate tax rate at 40 percent and the estate tax exclusion (the amount that can pass to a decedent’s heirs free of estate tax) set to be cut in half in 2026, these high net worth individuals are likely to consider charitable planning as a means of mitigating or eliminating future estate taxes.

Understanding the Assets

Not all assets are equal when it comes to charitable giving. For example, donating a minority interest in a closely held corporation may not provide the same charitable deduction benefits as a gift of publicly traded securities. In addition, the gift of the closely held corporation generally results in greater complexity for the charitable organization, often leading to compliance issues that a nonprofit might not have the resources to address properly.

Donors often are willing to use retirement funds for charitable giving. Retirement fund distributions are taxable at ordinary income tax rates, whether received by the original owner of the fund or a beneficiary. Retirement plans are also subject to estate tax if the owner has a taxable estate. The ultimate tax rate on inherited retirement funds can exceed 40 percent. As such, the donor can generate significant tax savings by leaving retirement funds to a charity, generally higher than tax savings achieved by donating other estate assets.

During life, a donor meeting the age requirements can also make a qualified charitable distribution from their retirement plan directly to a charity and exclude the distribution from income. Because those distributions will count as part of their required minimum distribution, donors can get a greater overall tax benefit by using this strategy for their charitable giving.

Nonprofits that understand and can discuss the tax consequences of donating different kinds of assets to both the donor and the charitable organization will go a long way to protecting the organization and impressing the donor. Organizations should have a written policy that addresses the types of donations they can and will receive. This will help guide discussions with potential donors and provide guidelines for minimizing risk to the organization.

Charitable Trust Strategies

Many high-net-worth individuals explore using trusts to accomplish some of their charitable giving. These types of trusts can provide both income tax and estate tax savings to the donor and can also provide a significant benefit to the charitable organization beneficiary if structured and funded correctly. Two types of charitable trusts are generally used; a Charitable Remainder Trust (CRT) or a Charitable Lead Trust (CLT). A CRT has a non-charitable beneficiary during the term of the trust, with the remainder payable to a charitable beneficiary. A CLT is the reverse, with a charitable beneficiary during the term of the trust and the remainder payable to a noncharitable beneficiary.

Charitable Remainder Trust: Donors preferring to receive income tax benefits generally use a CRT. The donor will typically fund a CRT with low-basis assets that the CRT will then generally sell. The gain recognized on the sale will then pass to the non-charitable beneficiary over the term of the CRT, which allows the non-charitable beneficiary to spread the tax effects of the gain over multiple years instead of in one year. Often a charitable organization will help manage a CRT, on the one hand, to relieve some of the administrative burdens, but also to maintain greater control over the trust investments to ensure a greater remainder value for the organization.

Charitable Lead Trust: Donors generally use a CLT for estate planning purposes either to limit future appreciation and “freeze” the value of the assets included in the gross estate or to provide a charitable benefit without giving away an incomeproducing asset. Donors can claim an income tax deduction for a portion of the transfer to the CLT, but if they do they will essentially recapture that deduction in future years when they will be responsible for paying income tax on the earnings of the CLT. If they do not claim an income tax deduction, then the CLT itself claims a charitable deduction when payments are made to the charitable beneficiary.

Payment Terms: Both a CRT and a CLT can be structured either as an annuity or a unitrust. An annuity is calculated when the trust is funded, and the income beneficiary—the non-charitable beneficiary of a CRT or the charitable beneficiary of a CLT—will receive the same amount each year for the term of the trust. The annuity is generally calculated to allow for a residuary payment to the remainder beneficiary when the trust terminates, but if the trust assets lose value over time, the annuity payments may fully deplete the trust assets. A unitrust payment helps to hedge against a potential loss in the value of the assets in the trust. The unitrust payment is a percentage, typically between five and ten percent, calculated annually using the fair market value of the trust assets as of a defined date. This means that the annual payment owed to the income beneficiary will either increase or decrease as the assets of the trust increase or decrease. In other words, it puts all beneficiaries on the same side, benefitting if the assets are properly invested to allow for future growth.

Other Considerations

Many, if not most of the families we work with who are charitably inclined, want a charitable legacy that will carry on through the generations. They are often provided with the option of creating their own private foundation or contributing to a donoradvised fund, allowing all family members to plan for charitable giving together. While these recommendations will provide them with a method for maintaining their charitable giving into the future, they are not the only options that can and should be provided to donors. One often overlooked option is to find a charitable organization whose exempt purpose resonates with the family and help fund an endowment that can provide a lasting income stream to the organization. If fundraising for an endowment is done properly, and the organization can speak to the family’s desire to have a charitable legacy that will continue for years, then both the donor and the organization benefit.

Read the full Fall issue of Insights, the HBK Nonprofit Solutions quarterly newsletter.

An endowment allows a nonprofit to manage a financial instrument that generates earnings it can use to forward its mission, helping to fund future operations and promote the organization’s long-term financial stability. Donations to an endowment tend to be larger than regular contributions—an endowment fund can be comprised of cash, securities, and other income-producing assets—due in part by the donor’s ability to create an enduring legacy by funding the organization long-term. But nonprofits must consider several key factors before creating an endowment, including the type of endowment, compliance with laws surrounding the endowment, and management of the endowment funds.

There are three different types of endowments – true, quasi, or term:

A true endowment occurs when a donor restricts the principal balance of a gift in perpetuity, and the organization can only use the investment earnings. It is not uncommon for donors to require that a portion of investment earnings be added to the gift and re-invested.

A quasi-endowment occurs when the board restricts funds and designates a portion of net assets without donor restrictions to be invested. In this scenario, the board can decide when the organization can expend the principal balance at any time.

A term endowment is similar to a true endowment, however, with a conditional restriction on the endowment funds. Once that condition is met, the organization may be able to expend a portion or the full amount of the endowment.

Regulation

Endowments are created to support a nonprofit, and spending or distribution policies apply to the amount of annual support an organization can obtain from its endowment. The Uniform Prudent Management of Institutional Funds Act (UPMIFA), a uniform law governing donor-restricted endowment funds, guides organizations and stipulates the management and investment of endowment funds. The UPMIFA is designed to protect donors and organizations related to contributions and ensure the funds are managed efficiently.

Organizations may disclose the adoption of UPMIFA in their financial statement footnotes. Suppose a nonprofit organization chooses not to adopt UPMIFA. In that case, it still must be aware that it is subject to disclosure requirements, regardless of whether it implements or is subject to UPMIFA. In their financial statements, organizations must provide detailed information on the following:

1. Return objectives and risk paraments that include the organization’s endowment composition and accounting policies


2. Strategies employed for achieving objectives that disclose the organization’s investment policies


3. Spending policy and investment objectives


4. Summary and changes in endowment


5. Interpretations of the relevant law


6. Underwater endowments, if applicable

An underwater endowment occurs when the fair value of the endowment fund is either less than the principal balance of the original gift or less than the amount that is required to be maintained as required by the donor or by law. In the event the endowment is underwater, the financial statements must disclose:

1. The value of the original gift


2. The fair value of the original gift


3. The number of underwater funds


4. The organization’s spending policy for underwater endowments

Underwater endowments are required to be classified within net assets with donor restrictions. They may be included in the aggregate amount of the net assets with donor restrictions on the face of the financial statements or shown separately within the net asset classification.

Before establishing an endowment fund

Nonprofits should consider whether establishing an endowment fund is an activity they can take on in addition to running and maintaining their programs. Managing endowments can take significant time, which could otherwise be spent on the organization’s mission. Organizations should ensure they have the appropriate personnel managing their endowments to relieve the unforeseen administrative burden.

Organizations must clearly understand what is involved in building and maintaining an endowment fund. Making an endowment fund large enough to where investment earnings are enough to sufficiently support an organization should also be a consideration.

Community foundations

Nonprofits may maintain their own endowment funds if they have the expertise, or they can place the funds with a community foundation that can provide financial expertise, access to planned giving, and access to financial resources they don’t have. Additionally, maintaining an endowment with a community foundation can help the organization focus on its mission, while the community foundation helps them stay compliant with the investment and spending policies.

Endowments that are transferred to a community foundation have special accounting considerations. The nonprofit will have access to future distributions from the transferred funds, and therefore the funds remain an asset of the nonprofit.

When the endowment gift is received by the organization, the entry recorded to show the receipt of the donation, and the applicable restriction would be such as:

Dr. Cash

Cr. Restricted Contributions

The initial entry for the transfer and creation of an endowment fund at the community foundation would then be:

Dr. Beneficial interest in assets held by the community foundation

Cr. Cash

As the community foundation distributes funds from the endowment to the organization— understanding that the distributions are in compliance with the spending policy—the organization receives cash and investment income. When changes in the endowment fund occur, the organization records any unrealized gains or losses, realized gains or losses, and interest and dividend income. When recording this activity, the organization would adjust the beneficial interest in assets held at the community foundation and other applicable income accounts.

Community and donor perceptions

If an endowment is very large, the organization could face scrutiny and have difficulty attracting donors and raising annual gifts; they could be perceived as not having a need. But an endowment does not address current needs. There are also administrative considerations. For example, each endowment should have separate accounting, even when they are pooled for investment purposes. Another consideration is the annual audit. The auditors will likely want to obtain copies of any applicable grant engagements related to the endowment, the organization’s spending, and its investment policy. Audit procedures performed can include:

1. Reviewing the organization’s investment roll forward for the year under audit


2. Sampling investments in the endowment fund portfolio and calculating fair market values subsequent to year-end


3. Testing compliance with the spending and investment policy for the endowment


4. Determining if there are any underwater endowment funds to disclose in the footnotes


5. Reviewing board minutes for board discussions about the endowment fund


6. Confirming investment balances


7. Considerations on how the endowment affects the liquidity and availability of resources

After all these factors have been considered, the board of directors will play an important role in determining if the organization moves forward with an endowment. If it accepts or sets up the endowment, it will require educating management, the board, and future donors on an ongoing basis.

Read the full Fall issue of Insights, the HBK Nonprofit Solutions quarterly newsletter.

You’ve decided to form a nonprofit. Just like forming a for-profit business, you have a lot of decisions to make upfront, many of which will require outside counsel from an accountant, a consultant, or an attorney. Without experienced counsel, your startup will face difficult challenges and could be doomed to failure.

First Step: Create Your Legal Entity.

For the IRS to recognize a nonprofit’s exemption from taxation, it must be organized as a trust, a corporation, or an association. (An unincorporated association can gain recognition as a tax-exempt organization, but this form of organization is not typically recommended for various reasons). Nonprofit incorporation or formation creates your nonprofit entity in your chosen home state. Your Articles of Incorporation/Formation will be required when applying for exempt status. This is also the first place where you will identify your nonprofit’s purpose.

Write Your Bylaws

Bylaws are legal documents, which means there are legal requirements for what should be included. These requirements vary depending on the state in which your nonprofit operates. To ensure your bylaws are in accordance with state laws, get assistance in drafting or amending your bylaws from a qualified professional experienced in nonprofit matters.

Your bylaws are your organization’s operating manual. Typically, they will include:

Size of the board and how it will function

Roles and duties of directors and officers

Rules and procedures for holding meetings, electing directors, and appointing or removing officers

Conflict of interest policies and procedures

Other essential corporate governance matters

As a governing document, your bylaws need to be included in your exemption application. The IRS looks for two key provisions to be included in either your Incorporation/ Formation Document or your bylaws:

A purpose clause: What are you going to do, and who will benefit from what you do? The purpose clause will help the IRS determine your organization’s exact exemption code.

A dissolution clause. How will you “go out of business” if the organization is not sustainable?

If you anticipate filing for 501c3 status, the IRS has specific requirements that apply to your purpose and dissolution clauses.

The bylaws may be quite different depending on the organization. Is the goal to gain status as a public charity, a private foundation, or some other type of exempt organization such as a membership organization?

Even with counsel, it’s still the board’s responsibility to provide input throughout the process and to vote to adopt the final product. Although bylaws are not considered public documents, making them public and easily available increases the organization’s accountability and transparency to donors, beneficiaries, and the general public.

Develop a Business Plan

Every nonprofit seeking tax-exempt status must have an Employer Identification Number (EIN), whether or not it has employees. File a Form SS-4 with the IRS to obtain your EIN.

This is the time for the organization to act like a business and develop its business plan. The business plan should address/include the following:

Past, present, and planned activities and programs

Any planned compensation of directors, officers, trustees, and certain highly paid employees and contractors (“Close Personnel”)

Any planned compensation of Close Personnel from related organizations

Existing or planned sales and/or contracts between the organization and any Close Personnel (including any organizations they have certain affiliations with)

Discussion of family and business relationships among directors, officers, and trustees

Goods, services, and/or funds (grants) to be provided to individuals or organizations

Fundraising programs planned

Conflict of interest policy or explanation of how the organization manages conflicts of interest

Financials (actual and/or projected) for three or four years

Besides being a business best practice, gathering much of this information will be necessary if you are required to complete a full Form 1023 or 1024 for exempt status.

Seek Exempt Status

Incorporating a nonprofit in the state of formation only establishes it as a legal business entity. Creating a nonprofit corporation does not guarantee the organization will be granted tax-exempt status by the Internal Revenue Service (IRS). You must apply for tax-exempt status with the IRS and be approved. There are currently 40 different types of exempt organizations in the Internal Revenue Code. Only organizations that meet the requirements of Internal Revenue Code Section 501(a) are exempt from federal income taxation. And charitable contributions made to some Section 501(a) organizations by individuals and corporations are deductible under Section 170.

Other benefits may include access to certain grant monies and income and property tax exemptions.

Determining the correct exempt status for the organization will depend heavily on who will benefit from the mission or its purpose, whether the assets will be dedicated to the mission, and where funding will come from.

Public Charities and Private Foundations

Every exempt charitable organization is classified as either a public charity or a private foundation. Generally, organizations classified as public charities are:

Churches, hospitals, qualified medical research organizations affiliated with hospitals, schools, colleges, universities, and other organizations that benefit the general public;

Have an active program of fundraising and receive contributions from many sources, including the general public, governmental agencies, corporations, private foundations, and/or other public charities;

Receive income from the conduct of activities in furtherance of the organization’s exempt purposes; or

Actively function in a supporting capacity to one or more existing public charities.

Private foundations usually have a single major source of funding, typically a gift from one family or a corporation, and most have as their primary activity the making of grants to other charitable organizations and individuals rather than the direct operation of charitable programs. Some private foundations, called private operating foundations, do directly operate their own charitable programs.

Political Organizations

A political organization subject to Section 527 is a party, committee, association, fund, or other entity (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.

Other Organizations

Organizations that meet certain requirements may qualify for exemption under subsections other than 501(c)(3). These include social welfare organizations, civic leagues, social clubs, labor organizations, and business leagues.

Application for Exemption

Certain types of organizations are automatically considered exempt without actually filing an application with the IRS, most notably, churches, their integrated auxiliaries, and conventions or associations of churches. Others must file either Form 1023, 1023-EZ, 1024, or 1024-A with the IRS seeking status. All applications are now filed online.

Organizations seeking status under 501c(3) apply using a 1023 or 1023-EZ form. Others seek status by filing Form 1024 or 1024-A.

When filing for a 501c3 determination, smaller organizations may file the simpler EZ Form— Streamlined Application, 1023-EZ. These applications are much easier and take less time complete, and the filing fee is smaller. Larger organizations will file full 1023 or 1024 forms and require much of the information in your “business plan.”

To get the most out of your tax-exempt status, file your Application Form within 27 months of the date you file your nonprofit Articles of Incorporation. If you file within this time period, your nonprofit’s tax exemption when granted takes effect on the date you filed your Articles of Incorporation, and all donations received from the point of incorporation forward will be tax-deductible. If you file later and can’t show “reasonable cause” for your delay, your tax-exempt status will begin as of the date on your IRS Application.

Once You File

Once you submit your application, you will receive an acknowledgment notice from the IRS confirming receipt of your application. If the IRS needs more information, an Exempt Organization specialist may request further information and will contact you and/or your power of attorney. If you have counsel or another representative assisting you with your application, contact them immediately regarding the additional information being requested. Do not try to answer their questions without their assistance.

Once the IRS completes its review of the exempt application, they will send you a determination letter, which will either grant your federal tax exemption or issue a proposed adverse determination, a denial of tax exemption that becomes effective 30 days from the date of issuance. If you receive a proposed denial of tax-exempt status, you have the right to appeal and should seek expert advice immediately. Do not delay; waiting to reply will risk the denial of your exemption.

The IRS review process typically takes several months or longer. Be prepared to wait. The IRS is currently processing 95,000 applications annually. Applicants can review current wait times by going to the IRS website: https://www.irs.gov/charities-non-profits/charitableorganizations/wheres-my-application-for-tax-exempt-status. You can also contact the IRS by phone at 877-829-5500; by fax at 855-204-6184; or by regular mail at:

Internal Revenue Service

EO Determinations; Attn: Manager, EO Correspondence;

P.O. Box 2508; Room 6-403; Cincinnati, OH 45202.

Compliance Begins Immediately

Unless you qualify for an exception from the requirement to file an annual return or notice, your filing obligations begin as soon as you are formed. If you have an annual information return or tax return due while your application is pending, complete the return by checking the “Application Pending” box in the heading Item B, and submit the return as indicated in those instructions. You should also determine when you are required to begin your state’s compliance filings, as each state has its own set of requirements.

Setting up an exempt organization can be confusing, to say the least. The HBK Nonprofit Solutions team is here to help.

Read the full Fall issue of Insights, the HBK Nonprofit Solutions quarterly newsletter.

Increasingly, investors are incorporating cryptocurrencies into their portfolios. Cryptocurrency
has graduated from the fringes of the dark web, where it resided for most of the last decade, to gain acceptance by mainstream institutions and investors. In February, Superbowl LVI featured three advertisements for cryptocurrency companies, one of which generated so much traffic that it crashed the company’s website. Considering the widespread adoption of cryptocurrency and the tax benefits of in-kind charitable contributions of appreciated property, charitable organizations should expect to see an increased number of donors seeking to make in-kind donations of cryptocurrency.

Donors of property are entitled to a charitable deduction equal to the appreciated fair market
value of such property at the time of the transfer —so long as the property has been held for more than one year¹. At the same time, it is well established that unrealized gains are generally not recognized when a donor makes an in-kind transfer for no consideration². The meteoric rise in the use of cryptocurrency in the last year presents an opportunity for charitably inclined taxpayers to maximize this double tax benefit. In some cases, donors have almost no basis in their cryptocurrency holdings, putting the after-tax value of nonrecognition on equal footing with the charitable deduction.

While current economic conditions present a unique fundraising opportunity for charitable organizations to solicit cryptocurrency donations, the opportunity carries compliance risk requiring careful consideration and planning.

The Uniform Prudent Management of
Institutional Funds Act

The Uniform Prudent Management of Institutional Funds Act (the “Act”) has been enacted in 49 states, the District of Columbia, and the U.S. Virgin Islands. The only state that has not adopted the Act is Pennsylvania, which imposes substantially similar requirements through its own law. In making
investment decisions for endowment funds, the Act requires the charitable organization to (1) act in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances (the “prudence standard”),³ and (2) consider its charitable purposes and the purposes of the endowment⁴.

The Act sets forth eight factors to guide investment decisions, which require the charitable organization to consider:

• general economic conditions

• the possible effect of inflation or deflation

• the expected tax consequences, if any, of investment decisions or strategies

• the role each investment or course of action plays within the overall investment portfolio of the fund

• the expected total return from income and the appreciation of investments other resources of the organization

• the needs of the organization and the fund to make distributions and to preserve capital, and

• an asset’s special relationship or special value, if any, to the organization’s charitable purposes⁵.

The Act specifically permits charitable organizations to invest in any kind of property or type of investment consistent with its terms.⁶ There is no reason to believe that this blanket permission excludes cryptocurrency, but the prudence standard—guided by the factors listed above—will likely preclude a charitable organization from allocating sizable portions of its endowed funds to
most cryptocurrencies due to their inherent volatility.⁷ Investment decisions about individual assets are not made in isolation but rather in the context of the portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the endowment and the charitable organization.⁸ Additionally, a charitable organization is required to diversify its
portfolio unless special circumstances dictate otherwise.⁹ Accordingly, cryptocurrency may find a home as a small allocation within a diversified portfolio.

The big caveat to the requirements above is that they are all subject to the donor’s expression of contrary intent.¹⁰ While the emphasis on donor intent does not mean that the donor can or should control the management of the charitable organization, the drafters’ comments to the Act provide that a charitable organization has an overarching duty to comply with donor intent, which is primary to the charitable purposes of the organization or endowment.¹¹ Accordingly, if the donor of a gift instructs the charitable organization to invest the gift in cryptocurrency by the gift instrument, the organization will not fall out of compliance with the Act by abiding by the donor’s instructions.

As mentioned previously, charitable organizations are likely to see an increased prevalence of in-kind donations of cryptocurrency by tax-motivated donors. An organization that accepts such a donation must then decide whether to retain the cryptocurrency or dispose of it. The Act
requires that an organization make and carry out decisions concerning the retention or disposition of property or to rebalance a portfolio to bring it into compliance with the purposes, terms, and distribution requirements of the organization as necessary to meet other circumstances and the requirements of the Act.¹²

While an organization that accepts such a donation will generally prefer to liquidate cryptocurrency immediately upon receipt to raise cash for their charitable purposes or convert it to a more suitable investment, the donor may prefer the organization to retain the cryptocurrency for a period or
indefinitely. If the donor fails to express this intent in the gift instrument, the organization will have to decide whether it will retain the cryptocurrency at the expense of its organizational goals or dispose of the property and jeopardize the likelihood of receiving gifts from the donor in the future.

Notably, the Act does not require the organization to arrive at a particular outcome – the organization may consider a variety of factors in deciding whether to retain or dispose of the cryptocurrency, and a decision to retain it for a period or indefinitely may be a prudent decision.¹³ The drafters’ comments to the Act explain that the potential for developing additional contributions by retaining property contributed to the organization is among the “other circumstances” that the organization may consider in deciding whether to retain or dispose of the property. Accordingly, the organization might be able to justify the retention of a position in a cryptocurrency that is otherwise unsuitable for its investment portfolio on the grounds that the donor i a prospect for future donations. While the organization will likely be able to justify retention with documented discussion and analysis, this gray area is an uncomfortable place to be.

Federal tax reporting obligations

If the donor is claiming a tax deduction of more than $5,000 with respect to a charitable contribution of cryptocurrency, the donee organization is generally required to sign
the donor’s Form 8283, if requested, to substantiate the deduction. The signature of the donee organization does not represent agreement with the appraised value of the cryptocurrency but merely acknowledges its receipt and that the organization understands its own reporting obligations if the cryptocurrency is disposed of within three years of receipt.¹⁴ If the organization disposes of the donated cryptocurrency within the three-year window, it must file Form 8282 to report information about the disposition to the IRS and provide a copy of the form to the original donor.

Remaining compliant through adequate risk management

Charitable organizations must be deliberate in their compliance efforts, establishing robust risk management procedures setting forth detailed instructions for organizational personnel to follow whenever cryptocurrency comes through the door. Risk management procedures may be
different for each organization but should include common-sense measures such as requiring any
donor making an in-kind gift of cryptocurrency or establishing a fund to hold cryptocurrency to sign an approved gift instrument stating, in no uncertain terms, the donor’s intent for the gift; requiring any donation of cryptocurrency with a value exceeding $5,000 to be disposed of only with the approval of a specific individual responsible for federal tax reporting; and requiring that any purchase of cryptocurrency be accompanied by documentation of the discussion and analysis justifying the purchase.

Read the full Spring issue of Insights, the HBK Nonprofit Solutions quarterly newsletter.

1 Treas. Reg. § 1.170A-1(c)(1).

2 The Humacid Co. v. Comm’r, 42 T.C. 894, 913 (1964).

3 UPMIFA § 3(b).

4 UPMIFA § 3(a).

5 UPMIFA § 3(e)(1).

6 UPMIFA § 3(e)(3).

7 Notwithstanding this observation, it is noted that one of the
largest charities in the country, the Silicon Valley Community
Foundation, is reported to hold $4.5B in digital assets according
to its financial statement, accounting for nearly a third of its
total investments.
https://www.siliconvalleycf.org/sites/default/files/documents/
financial/2017-independent-auditors-report.pdf

8 UPMIFA § 3(e)(2).

9 UPMIFA § 3(e)(4).

10 UPMIFA § 3(a).

11 See drafters’ comment on UPMIFA § 3 and 3(a): “In addition,
subsection (a) of Section 3 reminds the decision-maker that
the intent of a donor expressed in a gift instrument will control
decision making. Further, the decision-maker must consider the
charitable purposes of the institution and the purposes of the
institutional fund for which decisions are being made.”

12 UPMIFA § 3(e)(5).

13 See drafters’ comment on UPMIFA § 3(e)(5).

14 IRC § 6050L(a)(1)-(2). The exception for publicly traded
securities does not apply because cryptocurrency does not
qualify as a “security” for this purpose. See IRS Frequently
Asked Questions on Virtual Currency.