Introduction
Senators Angus King (I-ME) and Charles Grassley (R-IA) have introduced a bill that would suppress charitable giving. The title of the bill, the Accelerating Charitable Efforts (ACE) Act, S. 1981, suggests the legislation will increase resources for charities. However, the provisions within the bill would do the opposite—harming the exact charitable organizations and communities they seek to help. In the House, a companion bill, H.R. 6595, was introduced by Rep. Chellie Pingree (D-ME) and Rep. Tom Reed (R-NY) in February 2022.
The bill targets private foundations and donor-advised funds, or DAFs. These are charitable giving accounts maintained by individual donor advisors and oftentimes hosted by national sponsoring charities or community foundations. Every dollar that goes into a DAF is immediately and permanently committed to charitable giving.
Key Concerns With S. 1981:
- The bill creates more rules and mandates for donor-advised funds and private foundations that would restrict dollars from flowing to charities and the communities they support.
- The bill would add new definitions and complexity to the tax code, which could chill charitable giving overall.
- By imposing ineffective and counterproductive limits and requirements on private foundations, the bill would hamper them from achieving their charitable missions and threaten donor privacy.
- The bill makes it more difficult for charitable organizations to meet the IRS’ public support test and retain their status as a public charity by changing the treatment of some donations.
- Unlike other proposals, this bill excludes a key incentive for charitable giving—an expansion of the charitable tax deduction.
Understanding the King-Grassley Bill To Restrict Charitable Giving, S. 1981
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