Monday, April 23, 2007

Next innovation in charitable products

Lots of nonprofits and foundations (and their associations) are concerned about what will happen to donor advised funds in the coming months. This story from the WSJ about proposed changes to these very popular giving products has resonated all over the place. The hullabaloo started with a pending IRS investigation called for in the 2006 Pension Protection Act. Here's how the Journal reports it:

"Recently, charities have deluged the IRS with requests for a study the agency was ordered to do by the Pension Protection Act, passed last August, which tightened the rules in a bid to make personal use of the funds harder. The agency is looking into the funds' pros and cons compared to private foundations and other charitable tools."

Here's what drives me crazy about these kinds of stories. There's no sense of making things better, just a mad dash to "hold off the IRS" or "get rid of DAFs, they're all bad." Regulatory change can be a huge opportunity for innovation - think alternative fuels, stem cell research, the creation of 401K plans, even discount brokerages came about as a result of changes in SEC rulings.

So - why doesn't the philanthropy industry - seem to respond this way? What a great opportunity to invent the next best-selling mechanism to manage philanthropic assets ...

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