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AB-1712 Donor advised funds.(2019-2020)

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Date Published: 02/23/2019 04:00 AM
AB1712:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1712


Introduced by Assembly Member Wicks

February 22, 2019


An act relating to charitable organizations.


LEGISLATIVE COUNSEL'S DIGEST


AB 1712, as introduced, Wicks. Donor advised funds.
The Supervision of Trustees and Fundraisers for Charitable Purposes Act governs charitable corporations, unincorporated associations, trustees, commercial fundraisers, fundraising counsel, commercial coventurers, and other legal entities holding or soliciting property for charitable purposes over which the state or the Attorney General has enforcement and supervisory powers. Under the act, any person who violates any of the act’s provisions with intent to deceive or defraud any charity or individual is liable for a specified civil penalty. The act also authorizes the Attorney General to impose other specified civil penalties for related acts and omissions.
This bill would express the intent of the Legislature to enact legislation that would relate to donor advised funds for the purpose of improving transparency and accountability through annual reporting requirements, promoting best practices, and requiring minimum annual distributions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature hereby finds and declares all of the following:
(a) California taxpayers claim millions of dollars in tax deductions each year for contributions made to donor advised funds (DAF).
(b) Charitable contributions to organizations that sponsor DAFs account for a rapidly growing share of charitable giving. Recent reports have found all of the following:
(1) In 2016, six of the top ten recipients of charitable contributions in the United States were DAF sponsors, including the Fidelity Charitable Gift Fund, which received more charitable contributions than any other organization.
(2) The national share of total individual charitable giving contributed to DAFs increased from 4.4 percent in 2010 to 10.2 percent in 2017.
(3) DAF sponsoring organizations held more than $110 billion in charitable assets in 2017.
(c) A DAF is a charitable giving tool that has been used for decades by community foundations and other charities. Accelerating growth in the use of DAFs and the rapid expansion of DAFs affiliated with for-profit investment management businesses raises significant questions about whether these funds are being used as originally intended.
(d) Various reports analyzing DAFs suggest that in some cases each of the following are true:
(1) Contributions to DAFs have less transparency, oversight, and accountability associated with them than other types of charitable giving.
(2) Contributions to DAFs frequently fail to produce public benefits that are equivalent to the public benefits from contributions made to nonprofits that engage directly in charitable services and activities.
(3) DAFs are often conventionally invested in industries and economic sectors that may be at odds with the DAF’s charitable purpose.

SEC. 2.

 It is the intent of the Legislature to enact legislation that would relate to donor advised funds for the purpose of improving transparency and accountability through annual reporting requirements, promoting best practices, and requiring minimum annual distributions.