Philanthropy Divided Over Legislation to Accelerate DAF Grants

Monday, June 28, 2021

WASHINGTON, D.C. - Senators Angus King (I-ME) and Chuck Grassley (R-IA) have introduced bipartisan legislation aimed at ensuring that charitable dollars held in donor-advised funds (DAFs) are disbursed to working charities more quickly.

Under current law, DAF account holders receive full tax benefits for their donations upfront but are not subject to annual payout rate requirements as foundations are; more than $140 billion in funds designated for charitable causes are being held in DAFs. As proposed, the Accelerating Charitable Efforts (ACE) Act would reform tax laws to require DAFs to disburse those funds to nonprofits within a "reasonable" timeframe and encourage account holders to accelerate their giving. To that end, the bill would establish two types of DAFs: a fifteen-year DAF, under which the donor would receive upfront tax benefits only if the funds are distributed (or advisory privileges are released) within fifteen years of the donation; and a fifty-year DAF, under which the donor would receive capital gains and estate tax benefits upon donation but would not receive the income tax deduction until the funds are distributed — all within fifty years.

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