Tax Reconciliation Bill Passes Without Donor-Advised Fund Provision

May 18, 2006

Congress has passed the tax reconciliation conference report (H.R. 4297) without a provision that would restrict grants from donor-advised funds to U.S. 501(c)(3) charitable organizations. If enacted, this provision would bar grants from donor-advised funds to non-U.S. charities unless the foreign organization is determined to be the equivalent of a U.S. 501(c)(3), which can be a lengthy and time-consuming process. Click here for background information on this issue.

Although the provision relating to donor-advised funds as well as other charitable provisions were removed from H.R. 4297, Senate Finance Committee Chairman Charles Grassley (R-IA) and House Ways and Means Committee Chairman Bill Thomas (R-CA) have agreed in principle to include some of these provisions in the contents of an "extenders" package. Congressional leaders may attach the extenders package to pending pension reform legislation. Please visit the Council on Foundations' Charitable Reform Resource Center for a more detailed analysis and a roadmap of charitable reform legislation.

Both the Senate and the House have passed the tax bill (H.R. 4297) and the President is expected to sign H.R. 4297 shortly.