IRS is considering changes to rules governing donor-advised funds
The Internal Revenue Service(IRS) recently held hearings to address the regulation of #donor-#advised #funds (DAFs) amidst growing concern for how the funds are used, the Chronicle of Philanthropy reports.
The IRS is proposing changes to how the federal agency interprets the 2006 federal law governing DAFs.
For example, updated rules might include broadening the definition of a DAF to apply to a wider range of accounts;
making personal investment advisers, who help manage DAF asset, subject to DAF rules;
imposing excise taxes on DAF donations that provide significant benefit to the donor; and creating penalties for those who misuse DAFs.
In recent years, DAF assets have grown collectively to nearly $230 billion held in almost two million accounts. Even as overall charitable giving declined by 2.4 percent in 2022, distributions from DAFs increased by more than 5 percent.
“There are abuses out there and there’s money going places it probably shouldn’t,” said University of Notre Damelaw professor Lloyd Hitoshi Mayer.
“The warehousing of wealth that people have gotten deductions today for and actually aren’t helping people for who knows how long into the future…is a really big issue
The Chronicle noted that the IRS proposals do not address the changes outlined in the Accelerating Charitable Efforts Act (ACE Act), which would create baseline asset distributions and require the reporting of donor names. First proposed in 2021, the ACE Act and similar calls for reform are championed by DAF critics such the group Donor Revolt for Charity Reform, as well as philanthropist John Arnold.
https://philanthropynewsdigest.org/news/irs-is-considering-changes-to-rules-governing-donor-advised-funds
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