Proposed Federal DAF Rules Could Shut Down Some Charities, Attorney Says

Nonprofit organizations attorney Andrew Grumet was quoted in a Financial Advisor article expressing concern over proposed federal regulations affecting donor-advised funds (DAFs) and their potential consequences for charities. Mr. Grumet highlighted that the redefinition of a DAF under the proposed rules might subject numerous charities to new, stringent reporting standards that could be both costly and time-consuming, catching organizations off guard and even leading to closures for those unable to meet the compliance demands. Mr. Grumet also criticized the restrictions placed on financial advisers working with charities, noting the regulation's complexity regarding adviser compensation. He underscored the broad concern within the charitable sector about these regulations, advocating for a three-year transition period to allow the industry to adjust.

"Numerous charities that were not donor-advised funds (DAFs) are now going to be treated as DAFs and will therefore be required to meet new reporting standards that will be costly and time-consuming, some will not have the resources to meet the new standards," he said.

"A lot of charities are going to be caught off guard by this. If the regulations are adopted, it will be a big wake-up call for charities," he added.

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