In an op-ed published by Philanthropy Daily, Philanthropy Roundtable Director of Policy Research Jack Salmon responds to President Biden’s proposed 2025 budget and its restrictions on donor-advised funds (DAFs). In opposition to Biden’s proposals, Salmon explains how DAFs allow foundations to pursue their charitable missions effectively and provide the ability to innovate and respond quickly in times of crisis. Salmon also says excessive regulation would negatively impact charitable giving and communities in need.
Below are excerpts from the article “Biden’s Proposed Budget Vilifies Wealth and Threatens Philanthropy”:
“In unveiling his fiscal year 2025 budget blueprint, President Joe Biden has laid bare his administration’s policy manifesto. At the heart of this budget lies a broad vilification of ‘wealth.’
Of particular concern is the proposal for a new 25% tax on assets, extending its reach to encompass illiquid assets. This, alongside proposed tweaks to capital gains and carried interest taxation, casts a long shadow over the landscape of charitable giving. The ripple effects of such measures, compounded by new reporting obligations for trusts, could severely constrict the flow of funds to charitable causes and therefore the communities they support.
Much like Biden’s 2024 and 2023 proposed budgets, this year’s budget includes a provision that would ‘limit the use of donor-advised funds to avoid a private foundation payout requirement.’ While Biden levies criticism against DAFs for their perceived potential for abuse by foundations, data paint a different picture.
According to the National Philanthropic Trust, donations from DAFs to charities reached an estimated $52 billion in 2022, demonstrating their significant contribution to the philanthropic landscape. These flexible giving vehicles, increasingly popular with individual donors, are also occasionally utilized by private foundations as a giving tool.
Philanthropy Roundtable found several of the innovative and valuable ways in which private foundations use these giving vehicles to pursue their charitable missions to benefit communities in need.
The philanthropic sector thrives on flexibility and innovation. Donor-advised funds embody these principles, playing a pivotal role in amplifying the impact of private foundations and their philanthropic endeavors. Dismantling this system would only impede the sector’s ability to address pressing social issues and deliver positive change. Let us instead champion the innovative spirit DAFs aid, fostering a future where philanthropy continues to flourish.”
To read the complete article, please visit Philanthropy Daily.
