Greetings Friend,
Last week, the Department of the Treasury and the Internal Revenue Service convened a public hearing on the November 2023 proposed donor-advised fund (DAF) regulations. I had the privilege of joining several Council members to testify on the impact that these regulations would have on community foundations and other sponsoring organizations.
These past several months, our Government Affairs and Legal Resources team has been listening to you. We heard your questions, ideas, and concerns about how these proposed regulations could impact your ability to serve your communities. Those conversations informed our written comments in February and the testimony I shared on May 6th.
From the IRS Auditorium, I listened to witnesses share their concerns about the proposed regulations and the impact they would have on their work. Many described DAFs as a critical tool providing donors the flexibility to support the causes and organizations they care about in the near and long term. But they also talked about how DAFs are just one type of fund at a community foundation. Witnesses told stories of collaborative funds providing critical support to communities in times of tremendous need and how treating those funds as DAFs could hamper those efforts. Other concerns included the treatment of a personal investment advisor as a donor advisor, the definition of a taxable distribution, and the need for a reasonable effective date to give the field time to adjust.
In the past, I’ve left hearings feeling tired and frustrated. Not this one. I was inspired by the stories shared by foundation leaders illustrating how they engage with donors, nonprofit partners, and other community members to make a difference, including testimony from the Greater Kansas City Community Foundation, North Texas Community Foundation, Chicago Community Trust, New York Community Trust, Greater Toledo Community Trust, Rhode Island Foundation, Arizona Community Foundation, National Philanthropic Trust, Madison Community Foundation, Greater Cincinnati Foundation, and the Dayton Foundation.
So, what’s next? While Treasury and IRS staff work through the comments and testimony to adjust the proposed regulations, our Council team is identifying the resources, guides, and FAQs to be updated. We are also coordinating with Community Foundations National Standards to ensure that when regulations are released, your foundation will be provided with the tools necessary to maintain compliance.
I don’t know when final regulations will be released, but I know our team will be ready. In the meantime, please let us know how we can better support you and your work. And of course, thank you for all you do.
Best,
Jenn Holcomb
Vice President, Government Affairs and Legal Resources
jenn.holcomb@cof.org
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