The lowest ticket price (tax-deductible and non-tax-deductible) must be paid from a donor’s personal bank account. The remaining sponsorship costs may be paid by a grant from a donor-advised fund as long as the donor does not receive more than an incidental benefit in return. Logo or name recognition in event materials is not considered more than an incidental benefit.

Here is an example of what can be paid from a donor-advised fund for an event:

• A $5,000 event sponsorship includes a table for 10 with the donor’s name or logo in event materials.
• If the lowest ticket price to attend the event is $100, then the donor must pay $1,000 for the table from the donor’s personal bank account ($100 × 10 seats at the table), and a grant from a donor-advised fund can cover the remaining $4,000.

NOTE: If a donor chooses not to accept any benefits associated with a sponsorship, the entire amount may be paid by a grant from a donor-advised fund.

Donor-advised fund grants may support fund-a-need calls for outright donations at charitable events. However, grants from donor-advised funds cannot pay raffle tickets, games, or auction items because the donor cannot receive any personal benefits.

A grant from a donor-advised fund may fulfill a commitment to a 501(c)(3) public charity. However, Treasury and the IRS prohibit using the term “pledge” on grant checks or related correspondence. Instead, the donor should reference a “donation” or “gift.”

Donor-advised fund grants are prohibited from conferring any benefits “more than incidental” to the donor, donor advisor, or anyone related to them. The IRS has issued guidance indicating its opinion that donor-advised fund grants that enable attendance or participation in a charity-sponsored event are considered to provide a more than incidental benefit, even if the donor/advisor pays for the non-deductible portion of the ticket out of pocket—which would result in the assessment of a penalty excise tax on any donor/advisor who recommended the grant or who received the benefit. The same logic and penalty apply to membership fees that have deductible and non-deductible portions.