CFTC Bill Cuts Red Tape for Charities Managing Endowments, Exempting Them from Commodity Pool Operator Rules

This bill, officially titled the “CFTC Charitable Organization Exemption Act of 2025,” is straightforward: it carves out an exemption for certain charitable organizations from having to register with the Commodity Futures Trading Commission (CFTC) as commodity pool operators (CPOs) or commodity trading advisors (CTAs).

The Bureaucracy Bypass for Non-Profits

If you’re a major charity—like a university endowment or a large foundation—and you invest your funds, you might use complex financial products like futures, swaps, or options. When you pool those investments, the law often views you as a CPO or CTA, which triggers a whole host of costly and time-consuming registration and reporting requirements from the CFTC. This bill basically says, "Not if you're a qualified charity and you're only managing funds for other charities." Specifically, Section 2 amends the Commodity Exchange Act to exempt charitable organizations defined under Section 3(c)(10)(D) of the Investment Company Act of 1940, along with their trustees, officers, and employees, provided they are only advising or pooling funds for other charities.

Think of a major hospital foundation that manages a multi-million-dollar endowment. Their investment team uses sophisticated strategies to grow that money so the hospital can pay for new equipment or patient care. Under current rules, that team might spend significant time and money complying with CFTC registration rules designed for hedge funds. This exemption removes that burden. For the charity, this means less money spent on compliance lawyers and more money potentially available for their actual mission—which, for everyday people, could mean better services or lower costs down the line.

The Rules That Still Apply

While the bill offers a break from CFTC registration, it doesn't offer a free pass on oversight. The legislation requires these exempt charities to still comply with specific disclosure requirements laid out in Section 7(e) of the Investment Company Act of 1940. Furthermore, the bill explicitly states that this exemption does not relieve anyone of their existing obligations under the Securities Act of 1933 or the Securities Exchange Act of 1934. In plain English: if they are issuing securities in their investment pool, the SEC still has full authority, and investors still retain all the rights and remedies afforded by those laws. This is a smart move that keeps a necessary layer of investor protection intact while trimming overlapping bureaucracy.

Impact on the Ground

This is primarily a bill about efficiency for the non-profit sector. For the average person who donates to a charity or relies on services funded by a large endowment (like scholarships or research grants), this bill could be a quiet win. It allows the professionals managing that money to focus on maximizing returns rather than navigating duplicative regulatory paperwork. The biggest challenge is that the CFTC loses some direct oversight of these specific commodity trading activities. However, because the exemption is tightly defined—applying only to qualified charities acting solely for the benefit of other charities—the risk of abuse appears relatively low. It’s a targeted fix designed to streamline operations for organizations already under significant public scrutiny.