sunny.png
Saturday June 12th, 2021 7:47PM

Senators push measure to accelerate DAF, foundation giving

By The Associated Press
Related Articles
  Contact Editor

Two key U.S. senators introduced legislation Wednesday designed to spur faster payouts from donor-advised funds and foundations, giving new momentum to an effort that has deeply divided philanthropy.

Republican Sen. Chuck Grassley, of Iowa, a former chairman of the Finance Committee who still sits on that panel, and Sen. Angus King, an independent from Maine who caucuses with the Democrats, have teamed up on legislation that closely tracks a plan put forward by the Initiative to Accelerate Charitable Giving, a group of prominent wealthy donors, foundations, and scholars of charitable giving.

“The federal government offers tax incentives to Americans who give back, but in order to ensure that these funds are doing the most possible good, we must reform the rules that govern some charitable donations,” King said in a news release.

Wealthy donors can enjoy immediate tax advantages for establishing family foundations or making big deposits in donor-advised-fund accounts. Foundations are required by federal law to distribute at least 5 percent of assets annually, but donor-advised funds have no such requirements.

The King-Grassley legislation would allow donors to get an upfront tax deduction for donor-advised-fund deposits if they distribute the money within 15 years. Alternatively, donors could choose to delay the income-tax deductions and have 50 years to distribute their charitable funds. Donors could still receive immediate capital-gains and estate and gift tax savings.

The legislation also contains provisions intended to prevent donors of complex assets like real estate from claiming tax benefits that far exceed the actual value of the gifts.

For foundations, the legislation would waive the annual excise tax of 1.39 percent of their net investment income in any year their payout tops 7 percent of assets. Private foundations created after the legislation takes effect could be exempt from the tax if they agree to give away all the assets within 25 years of their founding.

The legislation would bar foundations from meeting their payout obligations by making distributions to donor-advised funds. A recent Chronicle analysis found that $740 million in such transfers were made in 2018, the most recent year for which data was available. Such transfers can help foundations meet their annual payout requirements, but critics say the transfers accomplish nothing for working charities.

In addition, the legislation would not allow foundations to meet their payout obligations by paying salaries or travel expenses of foundation family members, as they can now.

Some of the biggest donor-advised-fund sponsors in the nation are affiliated with commercial finance firms like Fidelity and Vanguard. They generally oppose efforts to require minimum annual distributions from advised funds.

Community foundations, which also sponsor donor-advised funds, also have warily eyed these kinds of efforts to boost payout, arguing that they operate differently.

Ray Madoff, a Boston College law professor and one of the architects of the proposal, said those differences are legitimate and the legislation would waive the reporting requirements for donor-advised-fund accounts of $1 million or less that are managed by community foundations. Accounts larger than $1 million at community foundations would have to be distributed in 15 years or would have to contribute at least 5 percent a year.

Jeff Hamond, coordinator of the Community Foundations Public Awareness Initiative, said he hadn’t seen the legislation yet. Generally speaking, Hamond said that efforts to impose new distribution requirements have been too broad and are “a solution in search of a problem,” but he noted that community foundations are “not opposed to all reforms.”

Independent Sector, a national coalition of charities and foundations, has not weighed in on the effort and declined to comment for this article.

The Philanthropy Roundtable and other conservative groups oppose new distribution requirements, saying they would discourage charitable giving.

Madoff said conversations were continuing on Capitol Hill on how the legislation might advance and whether it can attract more supporters, including in the House.

Madoff noted that recent news reports about billionaires paying minuscule amounts of taxes should serve as an “accelerant” for efforts to boost charitable giving.

“This is a moment when we are appropriately reshaping our tax rules,” Madoff said. “As a society, we make a tremendous financial investment in charitable donations, particularly charitable donations of the wealthy. It’s important that we make sure these resources are put to the use of the public and not just for the use of money managers.”

___

This article was provided to The Associated Press by the Chronicle of Philanthropy. Dan Parks is a senior editor at the Chronicle. Email: [email protected] The AP and the Chronicle receive support from the Lilly Endowment for coverage of philanthropy and nonprofits. The AP and the Chronicle are solely responsible for all content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.

  • Associated Categories: Associated Press (AP), AP Online Headlines - Washington, AP Online Congress News, AP Business
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Senators push measure to accelerate DAF, foundation giving
Two key U.S. senators introduced legislation Wednesday designed to spur faster payouts from donor-advised funds and foundations, giving new momentum to an effort that has deeply divided philanthropy
2:41PM ( 6 minutes ago )
Biden moves to restore clean-water safeguards ended by Trump
The Biden administration has begun legal action to repeal a Trump-era rule that ended federal protections for hundreds of thousands of small streams, wetlands and other waterways
2:36PM ( 12 minutes ago )
Census releases guidelines for controversial privacy tool
Hold onto your calculators, statisticians
2:26PM ( 21 minutes ago )
Associated Press (AP)
Minnesota 3rd-degree murder law at issue in ex-cop's appeal
A prosecutor has urged the Minnesota Supreme Court to uphold the third-degree murder conviction of Mohamed Noor, a former Minneapolis police officer who fatally shot an Australian woman who had called 911 in 2017
2:04PM ( 43 minutes ago )
Hostage advocates concerned by US pullout from Afghanistan
A new report says advocates for Americans held hostage overseas are concerned the U.S. military withdrawal from Afghanistan could make it harder to bring home captives from the country
1:54PM ( 54 minutes ago )
Federal appeals court blocks sweeping Missouri abortion law
A federal appeals court panel has blocked Missouri from enforcing a sweeping state abortion law that bans the procedures at or after eight weeks of pregnancy
1:26PM ( 1 hour ago )
AP Online Headlines - Washington
Russia expected to outlaw opposition leader Navalny's groups
A court is expected to outlaw the organizations founded by Russian opposition leader Alexei Navalny
11:08AM ( 3 hours ago )
US drops Trump order targeting TikTok, plans its own review
The White House dropped Trump-era executive orders that attempted to ban the popular apps TikTok and WeChat and will conduct its own review aimed at identifying national security risks with software applications tied to China
11:04AM ( 3 hours ago )
Albanian Parliament impeaches president for vote comments
The Albanian Parliament has impeached President Ilir Meta for violating the constitution and discharged him from the post
11:01AM ( 3 hours ago )
AP Online Congress News
FBI: Perceived grievances drove Virginia Beach mass shooter
The FBI says a city engineer who fatally shot 12 people in a Virginia Beach municipal building in 2019 was motivated by "perceived workplace grievances” that “he fixated on for years.”
1:21PM ( 1 hour ago )
The Latest: UK has highest daily virus cases since February
The U.K. has recorded its highest daily coronavirus cases since late February, suggesting the Delta variant is spreading widely across the country
1:07PM ( 1 hour ago )
Gucci digitally outfits Gen-Z in metaverse foray with Roblox
Anyone whose virtual alter ego is wandering around the Roblox online game platform these days might run into other avatars sporting Gucci handbags, sunglasses or hats
12:32PM ( 2 hours ago )
AP Business
Biden moves to restore clean-water safeguards ended by Trump
The Biden administration has begun legal action to repeal a Trump-era rule that ended federal protections for hundreds of thousands of small streams, wetlands and other waterways
2:36PM ( 12 minutes ago )
Census releases guidelines for controversial privacy tool
Hold onto your calculators, statisticians
2:26PM ( 21 minutes ago )
Mongolian ruling party seen winning presidency amid pandemic
Preliminary results in Mongolia’s presidential election show the chairman of the ruling Mongolian People’s Party and former prime minister Ukhnaa Khurelsukh winning by a large margin
2:24PM ( 24 minutes ago )
Lawmakers agree NCAA needs NIL help, but how much and when?
A federal law governing how college athletes can earn money off their fame seems like a certainty
2:20PM ( 27 minutes ago )
‘In the Heights’ lifts hopes for a Latino film breakthrough
The hype for “In the Heights” has brought great expectation to the Latino community in the United States, which has been historically underrepresented or stereotyped on the screen
2:14PM ( 33 minutes ago )