Bill would give donor-advised funds charity deadlines

A bill introduced in the Senate would have the effect of moving more money out of donor-advised funds and private foundations and into working charities.

For donor-advised funds, the bill, called the Accelerating Charitable Efforts Act or ACE Act, would establish deadlines for distributing money to charities. It would also tighten certain regulations for private foundations.

Under current law, donor-advised funds do not have a minimum payout rate. These charitable accounts are created and funded by individuals to distribute to charities in the future.
Donor-advised fund account holders receive a tax deduction when they put money into the fund. Opponents of these accounts argue that it’s not fair for the account holder to receive such a benefit before the money reaches a charity.

The proposed Act would place a time limit on when donor-advised funds are required to give money to charities. Under the bill, donor-advised funds would be required to give money to charities within 15 years to qualify for a tax break. These rules would apply to new contributions made to existing funds.

Under current law, private charitable foundations are required to give 5% of their assets each year for charitable activities. Under the ACE Act, these foundations would no longer be allowed to count salaries paid to family members as part of that 5% payout.