Charities Push Back as Financial Firms Delay Deceased Donors' Gifts

Charitable organizations across the United States are raising alarms over a growing practice by financial institutions that they say is holding up gifts left by deceased donors, sometimes for months at a time. Nonprofits say banks and brokerage firms are increasingly requiring personal information about charity employees before agreeing to release donated assets — a demand many organizations consider an overreach.

The friction is emerging at the intersection of anti-money-laundering compliance requirements and the transfer of bequests, a category of giving that has grown significantly as aging baby boomers update their estate plans. Financial institutions argue that know-your-customer rules obligate them to vet the recipients of large transfers, including nonprofit beneficiaries, before funds change hands.

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Charity officials counter that such policies misapply regulations designed for commercial transactions to philanthropic gifts that have already been legally designated through wills and estate documents. The delays impose administrative burdens on resource-constrained nonprofit staff and, in some cases, slow the delivery of services that rely on bequest revenue.

The dispute highlights a broader tension between the financial sector's compliance infrastructure and the nonprofit world's operational realities. Industry observers note that as wealth transfers accelerate over the coming decades — a period economists have described as the largest intergenerational transfer of assets in history — the volume of charitable bequests is expected to rise sharply, potentially amplifying the friction if policies are not clarified.

Representatives from the nonprofit sector are calling on regulators and financial firms to develop clearer, more proportionate standards for releasing charitable gifts. Continue reading at Business News.