Taxes on Taxable Distributions from Donor Advised Funds under Section 4966

Schell Bray, PLLC, a law firm representing philanthropic organizations, opposes several provisions of the proposed regulations as being overly broad, inconsistent with existing law, and potentially chilling First Amendment rights. They specifically argue against the retroactive application of the rules, the expanded definition of "donor-advisor," and the restrictive treatment of program-related investments.

Schell Bray, PLLC, a law firm representing philanthropic organizations, opposes several provisions of the proposed regulations as being overly broad, inconsistent with existing law, and potentially chilling First Amendment rights. They specifically argue against the retroactive application of the rules, the expanded definition of "donor-advisor," and the restrictive treatment of program-related investments.

The Tidewater Jewish Foundation, a publicly supported charity, opposes the proposed regulations because they are overly broad, inconsistent with Congressional intent, and would have significant unintended consequences for charitable giving. Specifically, the foundation argues that the regulations incorrectly classify certain investment fees as taxable distributions and improperly expand the definition of donor-advised funds.

The commenters, representing a coalition of nonprofit organizations and legal firms, urge the Treasury and IRS to explicitly exempt fiscal sponsorship from the definition of Donor Advised Funds (DAFs). They argue that the current proposed regulations are too broad and could inadvertently subject direct charitable programming to DAF rules, which would stifle innovation and the ability of projects to pay for goods, services, and staff.

Philanthropy Colorado, representing a network of community foundations, opposes the proposed regulations because they overly expand the definition of donor-advised funds (DAFs) to include collaborative giving vehicles and fiscal sponsorships. They argue the rules will create significant administrative burdens, impose unintended tax penalties on personal investment advisors, and cause disruptions to local philanthropy.

The Humboldt Area Foundation and Wild Rivers Community Foundation oppose the proposed regulations, arguing that the definitions of Donor Advised Funds (DAFs) are overly broad and would negatively impact rural communities, disaster relief, and various non-DAF giving vehicles. They specifically request expanded exceptions for state/local disaster declarations, clearer rules on advisory committees, and a longer transition period before the rules take effect.

Morgan Stanley Global Impact Funding Trust, a sponsoring organization of donor-advised funds (DAFs), opposes several provisions of the proposed regulations that they argue are overly broad and more restrictive than rules for private foundations. They specifically request exceptions for reasonable administrative expenses, clarification on the treatment of personal investment advisors, and a delayed effective date to allow for a smoother transition to compliance.

The Women’s Foundation of Colorado, a community foundation, opposes the proposed regulations because they may inadvertently capture non-DAF vehicles like Field of Interest Funds and Giving Circles, creating unnecessary administrative burdens. They also argue that the rules could restrict legally permitted advocacy by nonprofits and request a longer transition period of at least two years before the rules take effect.

The Bay Area Community Foundation, a public charity, opposes the proposed regulations because they are overly broad, create unnecessary compliance costs, and lack evidence of widespread abuse. They specifically argue against the inclusion of personal investment advisors as donor advisors, express concern over the potential misclassification of advisory committees, and request a more favorable scholarship fund exception and a delayed effective date.

The Community Foundation for Northeast Michigan opposes the proposed regulations, arguing that they are overly broad, create unnecessary compliance costs, and lack evidence of the abuses they aim to prevent. The organization specifically requests the removal of "personal investment advisors" from the donor-advisor definition, the inclusion of specific exceptions for advisory committees and scholarship funds, and a delayed effective date to allow for implementation.