What is settled. What counsel has worked through.

The cooperative does not operate its own DAF. It contracts as a service provider to a chartered DAF sponsor that holds a §501(c)(3) determination. The DAF sponsor receives the brand's cash contribution and issues the tax receipt. A separate operating §501(c)(3) (the Sponsor 501(c)(3)) holds the donated gift-card or Coop-IC inventory and coordinates POS adjudication with the cooperative under service contract.

This is the architectural lean the counsel work-stream has converged on (master spec §6.2.2). Two-tier DAF + Sponsor gives the most tax-defensible structure, the most operational separation between charitable receipt and program execution, and the most existing case-law support — over either a single sub-entity or a sister-foundation pattern.

IRC §170(c) cash contributions to qualified §501(c)(3)s — including DAF sponsoring organizations — are the most heavily-documented charitable deduction in the federal tax system. The brand's contribution is a cash gift; substantiation is the standard §170(c) acknowledgment letter. No inventory engineering. No §170(e)(3) qualification fragility.

DAF-specific compliance is governed by IRC §§ 4966–4967, IRS Notice 2006-109 and subsequent guidance, and Form 8283 (where the donated asset is non-cash and over $5,000). The sponsor has standard DAF-sponsor compliance obligations; the donor does not bear those obligations directly.

IRC § 4967 prohibits more-than-incidental benefit to the donor or donor-advisor from a DAF distribution. The cooperative's pathway is structured so the brand never controls how the donated value is deployed — only advises. After the brand's cash contribution, the DAF separately and at arm's length purchases SKU-level gift cards (or Coop-IC equivalents) from the brand at retail face value, and holds those assets as donor-restricted charitable inventory.

The arm's-length gift-card purchase is not a sham — it is a commercial transaction at observable retail-price between two separate legal persons under independent fiduciary control, documented as such on both sides' books. The DAF's subsequent deployment of those gift cards through the cooperative's POS-redemption rail is governed by the DAF's independent program-restricted purpose, not by donor instruction.

The cooperative is seeking — not assuming — USDA Food and Nutrition Service concurrence on the wallet-side displacement-routing logic at POS. The mechanism is straightforward: at checkout, the wallet identifies qualifying SKUs in the basket, applies cooperative DAF-held value first, and SNAP funds draw only on the residual. The federal SNAP outlay is offset by the brand-funded donation on the covered share of the basket — federal outlay reduces dollar-for-dollar on the donated portion.

No regulatory change is required for the cooperative to operate. FNS concurrence improves audit precision and removes any state-administrator ambiguity about the order-of-draw at the register. The cooperative's pre-charter coordination posture with FNS is documented in counsel's policy memo.

The cooperative's counsel work-stream surfaced four substantive questions during architecture review. They were framed in early concept-paper drafts as "open questions"; the current site treats them as "questions counsel has worked through."

• §170(e)(3) qualification of gift cards vs DAF cash-contribution pathway — resolved in favor of the DAF cash-contribution pathway as the structurally cleaner default. §170(e)(3) inventory donation remains available for actual inventory donation (e.g., shelf-stable food shipped from a brand's warehouse to the Sponsor 501(c)(3)).
• Single sub-entity vs two-tier DAF + Sponsor — resolved in favor of two-tier with explicit separation between the charitable receipt entity (DAF sponsor) and the operating entity (Sponsor 501(c)(3)), per master spec §6.2.2.
• USDA-FNS concurrence on displacement-routing logic at POS — in active coordination. Cooperative has prepared the operational briefing pack and is seeking, not assuming, agency concurrence.
• Anti-fraud safeguards on wallet-bound redemption — addressed through the cooperative's civic-class NGO member network handling beneficiary eligibility certification independent of brand or retailer involvement.