Earlier this month, the IRS issued long-awaited guidance on donor-advised funds (DAFs). As proposed regulations define them, DAFs are accounts maintained by “sponsoring organizations” and funded by charitable donors who retain advisory privileges regarding distribution of their accounts’ holdings. Distributions made to individuals or for non-charitable purposes are taxable, but non-taxable distributions can be made to organizations that aren’t charities so long as the money is used for charitable purposes. Sponsoring organization fund managers that knowingly make taxable distributions generally must pay a 5% excise tax on the amount (with a cap of $10,000 per distribution). Contact us with questions.© 2023