No doubt, you have heard about looming changes threatening the long-established rules governing donor advised funds (DAFs). Some commentators are sounding the alarm. The Philanthropy Roundtable says the changes “would stifle charitable giving, harming those in need.” Others welcome the effort to free up charitable dollars they believe have been squirrelled away for far too long. We will leave the Wagnerian sturm und drang to others, but it is important to understand these proposals and what may be coming our way.
On June 9, 2021, Senator Angus King (I-ME) introduced Senate Bill 1981, the Accelerating Charitable Efforts Act (the “ACE Act”) with Senator Charles Grassley (R-IA) as a co-sponsor. The bill was referred to the Committee on Finance. As of this writing, there are no additional co-sponsors and no companion legislation in the House. Although legislative prognosticators give the ACE Act only a 1% chance of becoming law in its current form, parts of it could find their way into other legislation. In addition, the ACE Act is heating up long-simmering debates about donor advised funds and private foundations.
Although the ACE Act includes some significant changes to the private foundation rules, donor advised funds are the primary focus – some will say “target” – of the bill. Following is a summary of major provisions of the ACE Act that apply to donor advised funds.
The Council for the Advancement and Support of Education (CASE) has released its “Global Reporting Standards, 1st Edition.” The vision for the Standards is audacious: “the first truly worldwide standards for advancement in education.” True to its title, among the book’s 350+ pages are supplemental chapters that provide specific guidance for counting charitable gifts in six different countries around the globe.
Although the primary focus is to articulate standards for the counting and recognition of all types of charitable contributions that will facilitate comparisons among educational institutions worldwide, the Standards also cover a broad range of issues beyond counting and recognition. There are extensive sections on ethics and standards of practice for advancement professionals, as well as guidance for navigating issues involving donor control and the moral thickets that can arise when a donor’s nefarious past comes to light.
Even if your organization is not involved in the education sector, it behooves you to be familiar with the CASE Standards.
As of the writing of this article, the inauguration of Joseph R. Biden, Jr. as the 46th President of the United States is just days away. Although past changes in the balance of political power have had little impact on overall charitable giving, we know that when donors experience uncertainty they tend to postpone and delay their giving decisions. This is a natural reaction: charitable giving is optional and, faced with uncertainty, the rational choice is to slow down or defer giving until the future becomes clearer.
Changes in tax law can create new and different gift opportunities. Gift planners will need to watch carefully and be prepared to react strategically to changing circumstances. What concerns might surface among donors? Could potential changes affect donors’ gift plans? How might we anticipate and address them? In this article we begin with a review of some concerns that are likely to be on donors’ minds with respect to charitable giving followed by a discussion of some of the essential processes by which Washington works.
Section 7520 of the Internal Revenue Code went into effect May 1, 1989. It describes the valuation tables that must be used for computing the value of certain income interests. These tables are used to computed the charitable deduction for all life income gifts, retained life estates, and lead trust gifts.