Revise Donor Advised Fund regulations

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                   Empowering “D.A.F.” Taxpayers to Put Charitable Funds to Work!

  1. “D.A.F.” Owners are taxpayers who have set up “Donor Advised Funds” through financial institutions, churches, large charities, etc. to facilitate charitable giving which is usually funded by tax-deductible contributions of appreciated stocks or other assets.
    DAFs are a major source of charitable donations in the United States.

  2. Currently there is no requirement for DAF taxpayers to move the funds they contribute (plus accumulated growth) to qualified 501(c)3 charities.

  3. As of 2022, according to the National Philanthropic Trust, approximately a quarter trillion dollars ($230 billion) was held dormant in Donor Advised Funds (DAFs) that has never been distributed to charities. These dormant funds are growing significantly year after year! As of 2022, there were nearly 2 million donor-advised fund (DAF) accounts in the United States. This is a ten-fold increase from 2013, when there were about 219,000 DAF accounts.

  4. Donor Advised Funds are offered and managed by various financial institutions, who are paid significant funds for ‘baby-sitting’ these charitable funds, so there is no efforts to actually put this money to work by encouraging taxpayers to designate specific charities for their contributions.

  5. Ongoing efforts to restructure the federal budget (DOGE) are currently reducing allocations for various agencies (many of which are designated by the IRS as ‘501(c)3’ charities).

  6. Restructuring DAF provisions is a opportunity to guide taxpayers to effectively funnel their charitable contributions to ensure that funding of important social services is determined by individual taxpayers rather than federal employees.

  7. We need government guidance to implement a requirement that DAF taxpayers allocate certain appropriate Minimum Required Distributions (RMD’s) from their Donor Advised Funds annually, to ensure that the original charitable intent embodied in the creation of DAF’s is facilitated in a timely manner.

Submitted by Bert Whitehead, J.D., M.B.A.
[email protected]