Last week U.S. Senators Angus King (I-Maine) and Chuck Grassley (R-Iowa) announced the introduction of legislation to revamp payout rules for donor advised funds (DAFs) and private foundations.

The Accelerating Charitable Efforts (ACE) Act replaces current DAFs with a choice: (1) a new DAF allowing donors an immediate income tax deduction provided funds are released within 15 years to charities, or (2) a 50-year payout DAF that allows an income tax deduction when funds are distributed. The bill requires complex assets to be valued based on immediate cash — rather than appraised — value, and it prohibits private foundations' expenditures on family salary or travel expenses (or contributions to DAFs) to count toward their payout obligations.

The ACE Act, which takes its cure from the Initiative to Accelerate Charitable Giving, is both bipartisan in support and opposition. Philanthropy Roundtable, which led a number of conservative groups in a letter against similar ideas in January, as well as groups like the Council on Foundations, quickly signaled opposition. For his part, Sen. King notes that DAFs currently hold more than $140 billion, but without “reasonable timeframes" for distribution they are enabling "tax breaks for donations that never actually reach working charities.”

ECFA will monitor this legislation closely as deliberations continue in Congress.