Last week a bipartisan group of legislators signaled support for donor-advised funds (DAFs) as an effective charitable giving tool. In particular, these 11 members of the House Ways & Means Committee — a key panel for tax-exempt matters — lauded the importance of DAFs in meeting basic needs during the pandemic.

“Donors and charitable organizations have given record amounts to support their neighbors in need – and they have made sure their dollars flowed to those affected as quickly as possible. This incredible response would not have happened without donor-advised funds (DAFs),” they said.

Led by Reps. Brian Higgins (D-N.Y.) and Mike Kelly (R-Pa.), the lawmakers cited data, including the National Philanthropic Trust’s latest DAF report, that shows the popularity of DAFs and their strong payout rates. They highlighted the $34.67 billion distributed by DAFs in 2020 and the notable increase in gifts specifically for charities working on the front lines meeting health, food, and shelter needs during the pandemic.

This bipartisan group did not specifically mention the Accelerating Charitable Efforts (ACE) Act, a bill ECFA explored when it was introduced in the House last month. However, the group’s letter did warn against “recent policy proposals that would put limits” on DAFs — proposals now being lobbied for by “activist groups.”

On the other hand, ACE Act supporters contend DAF rules need reform because they allow the wealthy to get tax benefits for their assets without necessarily providing help to charities. The lawmakers signing last week’s letter welcomed the heart behind ensuring nonprofits can access resources. However, they believe the proposals they have seen would actually be burdensome to givers and counterproductive to helping charities.

“We urge Congress not to consider any ill-informed or overly broad policy actions that could harm charitable giving and the philanthropic sector,” they concluded.

ECFA will continue to monitor this matter closely, particularly as ACE Act supporters are reportedly circulating a letter of their own to spur support for their controversial DAF overhaul proposal.