The Treasury Department has issued a report on donor-advised funds and supporting organizations that had been mandated by the Pension Protection Act of 2006.
According to the Quarterly, Treasury’s report, issued last week, relied on 2006 data for a study published five years later—for reasons that remain unclear.
As of 2006, the overall Treasury numbers show DAFs paying out at a considerably higher rate than private foundations: an average DAF payout for 2006 of 9.3% for all DAFs, 14.2% for national commercial DAF managers and 28.7% for other national DAFs (the median payout of noncommercial national DAFs was only 10.5%, suggesting that some of those national DAFs turn over the bulk of their funding every year, the Quarterly pointed out). This compares with the minimum required payout of 5% for private foundations.
Community foundation DAF payout averaged 9.3%, the same as the national total. Educational institutions not the commercial funds were the slow spenders, with an average payout of 3.3% and a median of zero.
The Quarterly said Treasury appears satisfied with the aggregate payouts by DAF managing entities, and largely unworried about the issue of donor control. Sen. Charles Grassley, R-Iowa, however, was reportedly unhappy with the report, not least because it used five-year-old data in its analysis.
The publication was “somewhat of a non-event,” according The Nonprofit Quarterly, especially given the controversy surrounding these charitable instruments at the time of PPA’s enactment.
The report comes at a time when some critics are urging that Congress impose mandatory payouts on DAFs.
The PPA was designed to address abuses of DAFs and supporting organizations, which were revealed during Senate Finance Committee hearings chaired by Grassley. The legislation imposed the first statutory definition of DAFs and modified the definition of supporting organizations, according to the Quarterly.
Among the changes were new reporting requirements for DAFs and supporting organizations, excess benefit standards for both and payout requirements for some forms of Type III Supporting Organizations—apparently where many abuses took place.
The PPA also directed the Treasury Department to determine whether a distribution or payout requirement should be imposed on DAFs and whether a donor’s influence or control over a DAF made it in any way similar to a private foundation.