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Representatives in Congress Express Support for DAFs

A bipartisan 'Dear Colleague' letter from members of the Ways and Means Committee highlights the effectiveness of donor-advised funds.

On Friday, Reps. Brian Higgins (D-N.Y.) and Mike Kelly (R-Penn.) sent a Dear Colleague letter expressing support for donor-advised funds (DAFs). The letter was signed by 11 members of the Ways and Means Committee, five Republicans and six Democrats and highlights the effectiveness of DAFs and how they were used during the pandemic to quickly deliver much-needed aid to ailing communities. The letter addresses recent calls from critics to reform rules around DAFs and highlights how DAFs are an important tool for charitable giving, especially during times of increased need. Here are a few key excerpts from the letter:

On attempts to limit DAFs: Activist groups have started lobbying Congress to significantly reform the rules around DAFs and family foundations, and legislation has been introduced to that effect. We are concerned these proposals would reduce philanthropic giving and restrict the ability for generous families to respond quickly to crises such as the COVID-19 pandemic.” 

On charitable giving during COVID: U.S. nonprofits and foundations have stepped up like never before in response to the COVID-19 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.

 On DAF effectiveness in response to COVID: While COVID-19 highlighted the power of DAFs, the explosion in giving did not start with the pandemic. According to NPT’s 2021 Donor-Advised Fund Report, charitable grants from DAFs have more than doubled in the last five years. Additionally, for every year on record, the annual grant distribution rate for all DAFs has consistently been over 20 percent of assets. In fact, the payout rate for DAFs in 2020 was 23.8 percent, the highest in a decade. And most DAF sponsors have inactive funds policies to ensure charitable assets are making their way to working charities.

Also last week, Accelerating Charitable Efforts (ACE) Act sponsors Reps. Chellie Pingree (D-ME) and Tom Reed (R-NY) began circulating a Dear Colleague letter of their own, which outlines some of the provisions in the ACE Act and encourages members to support the bill. It suggests DAFs prevent money from getting in the hands of “actual charities,” and it suggests money going out today is always better than money going out in the future. 

Stay tuned for how these efforts land with fellow lawmakers. 

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