Taxes on Taxable Distributions from Donor Advised Funds under Section 4966

Renaissance Charitable Foundation Inc., a sponsoring organization for Donor Advised Funds (DAFs), opposes the proposed regulations because they create confusion, increase administrative costs, and lack a sufficient transition period. The organization argues that the regulations overreach by broadening the definition of DAFs and requests the removal of the "Personal Investment Advisor" definition.

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.

The Los Altos Mountain View Community Foundation, representing a community foundation, opposes the proposed regulations because they would impose an overly broad definition of Donor Advised Funds (DAFs), create significant administrative burdens, and disrupt existing philanthropic programs. They argue the rules would negatively impact fiscally sponsored projects, disaster relief efforts, and the ability of community foundations to work with personal investment advisors.

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.

A coalition of donor-advised fund (DAF) sponsoring organizations opposes the Proposed Regulations, arguing they are overbroad, lack statutory authority, and will chill charitable giving. They request that the regulations be withdrawn and redrafted to protect existing administrative practices, allow for reasonable compensation of investment advisors, and provide adequate transition periods.

Forefront, an Illinois association representing foundations and nonprofits, supports the proposed rulemaking but requests specific refinements to ensure clarity and equity. They advocate for exemptions for certain scholarship and disaster relief funds, clarification on fiscal sponsorship and lobbying rules, and a two-year delay for the effective date to allow for industry adaptation.