Understanding the Impact of New Donor-Advised Fund Rules

ARTICLE | July 24, 2024

Authored by Vasquez + Company

The IRS has proposed new regulations for donor-advised funds (DAFs) that aim to provide clarity for donors, sponsors, advisors, and charitable organizations. However, these proposals have sparked controversy within the DAF community. The article "Insight Into Proposed Donor-Advised Fund Regulations" explores these regulations and their potential impact.

Key Points:

• DAF Basics: DAFs allow donors to contribute to funds managed by financial institutions or independent sponsors, instructing how to distribute funds to charities.
• IRS Definitions: The proposed regulations define key terms like donors, donor-advised funds, donor-advisors, advisory privileges, and distributions.
• Community Concerns: Controversial changes include restrictions on single-entity funds and "daisy chain" distributions, with significant penalties for non-compliance.
• Unaddressed Issues: The new regulations do not address the duration that funds can remain in a DAF without distribution, a major concern for many stakeholders.

The final outcome of these proposed regulations will depend on the IRS's next steps following the comment period.

For more information, read the full article here.

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