Drudge Retort: The Other Side of the News
Thursday, December 01, 2022

Foundations shift billions to donor-advised funds, skirting US laws requiring transfers to the needy, a Bloomberg analysis finds.



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...For years, New York hedge fund tycoon Robert Mercer itemized in public tax filings the millions of dollars his family foundation gave to conservative causes. Then, in 2018, the foundationmade by far its largest giftto an account called a donor-advised fund that effectively keeps his philanthropy secret.

At the Allender Family Foundation Inc., based in a house near Las Vegas on Marie Antoinette Street, a millionaire family has used the same sort of fund for another purpose increasingly popular among the wealthy: keeping the tax benefits of philanthropy while delaying for years actually giving to those in need.

The Mercers and the Allenders are among a small but growing number of wealthy Americans who've discovered how to bypass rules designed more than a half-century ago to ensure philanthropists stay accountable for the billions of dollars in tax breaks they receive each year. The key is the donor-advised fund, or DAF, which is so flexible that charitable dollars can sit in one indefinitely, and so opaque that no one needs to know either way.

The surge of assets into the funds haslong sparked concern, but one gaping loophole has attracted far less attention. Private foundations are using them to sidestep federal laws designed to make sure the wealthy donate money to the needy in a timely fashion, not delay the gifts for generations.

The workaround involves the foundations that many rich people set up to manage their philanthropy. The organizations are generally required to pay out 5% of their assets annually and report each charitable gift to the public. Donor-advised funds, which are considered charities, satisfy that mandate, so they're an ideal way for foundations to postpone their giving. For example, Tesla Inc. co-founder Elon Musk, who built up $3 billion in a foundation, could report that he met the requirement for moving out money only because he transferred tens of millions of dollars to DAFs in recent years....

#1 | Posted by LampLighter at 2022-12-01 04:45 PM | Reply

Isn't that the point of the loophole? Some reason congress wanted it and never shut it off.

#2 | Posted by oneironaut at 2022-12-01 07:13 PM | Reply

---- off loser.

#3 | Posted by LegallyYourDead at 2022-12-02 12:16 AM | Reply

Some reason congress wanted it and never shut it off.

Of course congress wanted it. If they didn't, it wouldn't exist! This is more evidence that both sides cater to their wealthy donors; to the detriment of those truly in need.

I was glad to see the 15% minimum tax enacted. But, I suspect that somewhere buried in the fine print, there will be ways to get around paying that 15% minimum tax as well.

#4 | Posted by FedUpWithPols at 2022-12-02 06:25 AM | Reply

I'm not sure I understand why the need for the DAF if people just want to donate to charity. Why hold it in a DAF? Becuase their foundation has to give at least 5% of the just do that. Once funds are transferred into a foundation....and the donor takes a tax break....are they allowed to retrieve that money for any reason?

What I'm saying is that if you want to donate to your foundation...then donate it and allow at least 5% of the assets to go out to the intended beneficiaries. This DAF holding tank is what stinks this thing up.

#5 | Posted by eberly at 2022-12-02 09:44 AM | Reply

Some reason congress wanted it and never shut it off.

Of course congress wanted it.

Congress has very little actual knowledge of any tax law. They rely on lobbyists to write the laws and explain the laws to them. They're cool with most changes to the tax code that the funders of their super pacs want so long as the money keeps flowing to them.

How do you think dumbsh*ts like Honey BoBo go from bankrupt to a net worth of 41 million in two years?

#6 | Posted by Nixon at 2022-12-02 01:48 PM | Reply

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