Treasury Finally Floats Trial Balloon on Donor-Advised Fund Rules

On December 4, 2017, the Department of Treasury issued Notice 2017-73, indicating Treasury’s thinking of what the Proposed Regulations on Donor Advised Funds (DAFs) might be. The Notice asks for input by March 5, 2018, on areas Treasury is considering issuing Regulations. A Notice is a way to request informal feedback prior to issuing Proposed Regulations.

The Notice requests input in four areas:

  1. Two examples where distributions from DAFs may provide more than “incidental” benefit to a donor, donor advisor or related person;
  2. Circumstances under which a distribution may be made from a DAF without consideration of whether there was a personal pledge outstanding to the grantee from the donor, donor advisor or related person;
  3. Circumstances under which grants made out of a DAF must be attributed back to the donor, donor advisor or related person to calculate excess contributions under the public support test of IRC 509(a)(1) or excluding contributions from disqualified persons for IRC § 509(a)(2) public support.
  4. The final area is a catch-all for any area not specifically addressed in the Notice’s examples.

The Notice will have impact beyond sponsors of DAFs and contributors to DAFs.  Recipients of DAF funding may see a significant increase in burden and a chilling effect on DAF giving if the Notice becomes Regulations.

Please watch for upcoming articles on all four areas. We will use these articles to provide insights from an audit and tax perspective.

Please contact or email us at info@clarknuber.com if you have specific questions on the notice or would like assistance in drafting feedback to the IRS and how the proposed changes would affect you or your organization.

© Clark Nuber PS and Developing News, 2017. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Developing News with appropriate and specific direction to the original content.

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