Donor-advised funds touted for charitable impact as IRS develops guidance

In an October 14 letter to the Internal Revenue Service, the Community Foundation Public Awareness Initiative (CFPAI) urged officials to consider that donor-advised funds (DAFs) at community foundations can be used to do genuine charity work.

DAFs are the country’s fastest-growing charitable giving vehicle, allowing donors greater decision-making authority on how their charitable gifts are distributed, although critics claim that the funds merely allow for the wealthy to shield money from taxes without having to donate it directly to a charity.

In its letter, the CFPAI, an education and advocacy effort comprised of over 100 community foundations in 45 states and started in 2012 to help educate lawmakers about the work of community foundations, notes that in many cases DAF money has been used for social good. This includes private foundations who have used donor advised funds at a community foundation to direct local giving or provide stability to grantees during major market fluctuations.

Treasury officials have indicated that they are working on more guidance on DAFs, particularly with respect to their relationship with private foundations and allegations that some funds have been used to get around the public support test.

Source: BNA Daily Tax Report (subscription required)

Types: Blog
Global Topics: Public Policy
Policy Issues: Donor-advised Funds, Tax & Fiscal Policy