In the Headlines
February 26, 2024

IRS Donor-Advised Fund Proposal Could Have 'Chilling Effect'

Financial Planning

Nonprofit organizations attorney Andrew Grumet was quoted in a Financial Planning article expressing significant concerns over proposed IRS regulations that could redefine the role of financial advisers in managing donor-advised funds (DAFs). Mr. Grumet pointed out the potential for these rules to complicate the philanthropic landscape by introducing excise taxes for advisers, effectively altering how DAFs operate and how advisers guide their clients toward charitable giving. He warned that such changes could disrupt the current DAF ecosystem, affecting financial advisers' capacity to recommend DAFs and potentially impacting the flow of charitable contributions.

"If you look across the landscape of charities out there that sponsor programs and how many of them have this option built into it, you'll find it's pretty significant, it puts a lot of financial advisers in hard situations," he said.

"Clearly financial firms have the opportunity at least to take different approaches to this, but it's still going to upend the whole system, and nobody really knows what's going to happen, donor-advised funds are a big part of the philanthropic ecosystem. Regardless of your opinion, they are. The proposed regulation really upends the ecosystem on a lot of different fronts," he added.

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