On an ongoing basis, our team tracks legislation, legal developments, trends, news, and innovative strategies for all types of charitable giving so that we can keep fundholders and their advisors up to date.
Recently, donor advised funds (DAFs) have been the subject of conversation within financial and estate planning circles, as well as a trending topic in philanthropy, related to a set of proposed regulations issued by the IRS late last year. The IRS has scheduled public hearings on the proposed regulations, set for May 6, 2024.
As just one of many types of funds your clients can establish at the community foundation, the DAF is popular because it allows your client to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, the client can recommend gifts to favorite charities from the fund to meet community needs as they emerge.
Our team has compiled a list of articles we’d recommend if you’d like to dig deeper into the topic of donor advised funds. Of course, we welcome your questions and comments, so please reach out anytime!
Resources
The National Study on Donor Advised Funds
The DAF Research Collaborative’s recently-released study of donor advised funds reported that the majority of donor advised funds make at least one grant per year, and the national average annual “pay-out rate” for all donor advised funds is 18%.
DAFs are frequently deployed as a tool to help philanthropists who have a wide range of financial capacity, from a little to a lot, organize their charitable giving; consistent with that function, the study found that nearly half of all donor-advised funds carry balances less than $50,000.
Articles
The proposed IRS regulations related to donor advised funds are attracting significant interest in legal circles. To dig into the legal issues, check out:
- Proposed Federal DAF Rules Could Shut Down Some Charities, Attorney Says, from Financial Advisor
- Charity Groups Balk at IRS Proposal for Donor-Advised Funds, from Bloomberg (subscribers only)
For a big-picture look at the state of donor advised funds, including the relevance of recent research and the status and implications of the proposed regulations, read:
- Donor-Advised Funds in the Crosshairs in DC, from Wealth Management
- Comments Close on IRS' Excise Tax Plan for Donor-Advised Funds, from Think Advisor
While these materials are useful to gain an understanding of the current situation, at this point, no one can predict what will happen with the proposed regulations — whether and how they will be revised or when they might become effective, if ever. As always, our team is staying on top of the issues. We’ll keep you posted!
