The $230 billion donor-advised fund industry gets an IRS hearing

By STEPHANIE BEASLEY of The Chronicle of Philanthropy
Chronicle of Philanthropy

WASHINGTON (AP) — Congress and the Biden administration are considering what, if anything, should be done to tighten restrictions on donor-advised funds, an increasingly popular way for donors to set aside money to spend on charitable causes. This week, the Internal Revenue Service held a public hearing to discuss plans to regulate DAFs. The proposals include: altering the definition of what constitutes a DAF so it applies to a broader swath of accounts; expanding the definition of donor advisers to include personal investment advisers who help manage assets in DAFs; and imposing new penalties for abusing the funds. If approved, the IRS would impose a 20% excise tax on donations that provide significant benefit to the donor, among other changes.