Taxes on Taxable Distributions from Donor Advised Funds under Section 4966

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.

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 They request that the regulations be withdrawn and redrafted to protect existing administrative practices, allow for reasonable compensation of investment advisors, and provide adequate transition periods.

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 National Christian Charitable Foundation, Inc. (NCCF), a nonprofit organization, opposes the proposed regulations because they create ambiguity, impose unnecessary administrative burdens, and threaten donors and sponsors with excessive excise taxes. They argue that the regulations reflect a distrust of Donor Advised Funds (DAFs) and would negatively impact charitable giving and grantmaking in the United States.

The League of California Community Foundations opposes the proposed regulations, arguing that they create overly broad definitions of Donor Advised Funds (DAFs) that would misclassify various charitable programs and impose significant administrative burdens. They specifically request narrower definitions, expanded exemptions for disaster relief and designated funds, and a longer transition period to avoid disrupting local philanthropy.

The Madison Community Foundation opposes the Proposed Regulations, arguing they impose a disparate and burdensome impact on community foundations compared to commercial gift funds. They specifically cite concerns regarding overly broad definitions of "advisory privileges" and "distributions," increased compliance costs for personal investment advisors, and the lack of clarity regarding expense allocation.

The North Carolina Center for Nonprofits opposes several provisions of the proposed regulations, arguing they create unnecessary compliance burdens, risk taxing legitimate investment fees, and could stifle nonpartisan advocacy and fiscal sponsorship arrangements. The Center requests specific exemptions for fiscal sponsorships and giving circles, as well as clearer language to protect legal nonprofit advocacy activities.

The Jewish Communal Fund (JCF), a large Jewish donor-advised fund (DAF) sponsoring organization, opposes the proposed regulations because they would impose significant administrative burdens and potentially discourage charitable giving. They specifically argue against treating personal investment advisors as "donor-advisors," request a narrower definition of "distribution," and advocate for a longer transition period for implementation.

The Jewish Communal Fund (JCF), a large Jewish donor-advised fund (DAF) organization, opposes the proposed regulations because they would impose significant administrative burdens and potentially discourage charitable giving. They specifically argue against treating personal investment advisors as "donor-advisors," request a narrower definition of "distribution," and advocate for a longer transition period for the new rules.

The Orange County Community Foundation opposes the Proposed Regulations, arguing that expanding the definition of "donor advisor" to include "personal investment advisors" is legally unauthorized, unworkable, and disproportionately harms community foundations. They contend that existing state and federal regulations (such as those from the SEC and FINRA) already provide sufficient oversight of financial advisors and that the new rules would discourage charitable giving by forcing donors to move assets to private foundations.