The Accelerating Charitable Efforts Act, known as the ACE Act, is a proposed federal bill that would set hard deadlines for donor advised funds to distribute their assets to working charities, restructure how and when donors get their tax deductions, and impose a 50% excise tax on money that sits in a DAF too long. It would also tighten rules on private foundations and change the tax treatment of non-cash gifts to donor advised funds. None of it is currently law.1United States Congress. H.R. 750 – 119th Congress (2025-2026) ACE Act
Where the Bill Stands
Senator Angus King of Maine first introduced the ACE Act in the Senate as S. 1981 in June 2021.2United States Congress. S.1981 – ACE Act 117th Congress (2021-2022) A House companion followed in February 2022. Neither moved out of committee. The current version, H.R. 750, was introduced in the House in January 2025 and referred to the Ways and Means Committee, where it remains as of early 2026.1United States Congress. H.R. 750 – 119th Congress (2025-2026) ACE Act Anyone making giving decisions today should plan under existing rules.
The Core Change: A Deadline for Payouts
Under current law, a donor advised fund has no payout deadline at all. A donor contributes cash, stock, or other assets to an account at a sponsoring organization, claims the tax deduction in the year of the contribution, and then recommends grants to charities on whatever timeline they choose, including never. Unlike private foundations, which must distribute roughly 5% of investment assets each year, DAFs face no minimum annual payout and no final deadline for getting money to a working nonprofit.
The ACE Act’s central move is to end that open-ended timeline. It would sort DAFs into two categories, each with its own distribution window and its own tax treatment. Donors would effectively pick between an immediate deduction with a shorter clock or a delayed deduction with much more time.
The Two DAF Categories
Qualified DAFs: 15 Years
A qualified donor advised fund would look much like today’s DAF from the donor’s perspective. You contribute, you claim your income tax deduction in the year of the gift, and the sponsoring organization takes ownership of the assets. The new obligation lands on the back end: the full contribution plus any investment earnings must be distributed to charities within 15 years of the donation date.3United States Senate. ACE Act – Accelerating Charitable Efforts Act If the donor still holds advisory privileges and the money hasn’t moved by the deadline, the excise tax hits.
For donors who use their DAFs as active grantmaking vehicles, 15 years is a generous window. The pinch is on accounts that accumulate for decades with little outflow.
Non-Qualified DAFs: 50 Years
Donors who want more time can elect a non-qualified DAF and get 50 years to distribute the funds. The trade-off is real: no income tax deduction at the time of contribution. The deduction is deferred until the sponsoring organization actually grants the money to a working charity.3United States Senate. ACE Act – Accelerating Charitable Efforts Act Capital gains and estate tax benefits would still apply at the moment of contribution, so a non-qualified DAF isn’t stripped of tax advantages entirely. But the income tax deduction, which is what most donors are actually after, only arrives when the money reaches a charity.
The 50% Excise Tax
The enforcement behind both deadlines is a 50% excise tax on undistributed amounts. If a qualified DAF misses year 15, or a non-qualified DAF misses year 50, the sponsoring organization owes tax equal to half of what remains in the account. The tax applies to the original contribution and to investment growth attributed to it.
By comparison, private foundations that miss their annual 5% payout face a 30% excise tax initially, with an additional 100% tax if the shortfall isn’t corrected in time.4Internal Revenue Service. Taxes on Failure to Distribute Income – Private Foundations The 50% rate for DAFs is a stiff opening penalty.
Non-Cash Gifts Would Change the Most
Contributing appreciated privately held stock, real estate, or other non-publicly traded property to a DAF is currently one of the most tax-efficient giving moves available. A donor can claim a deduction for the full appraised fair market value and avoid capital gains tax on the appreciation, even if the sponsoring organization holds the asset for years before selling.
The ACE Act would rewrite this. For contributions of assets that aren’t publicly traded, no income tax deduction would be allowed until the sponsoring organization sells the asset. The deduction would then be capped at the actual sale proceeds, not the appraised value at donation. Donors would also need contemporaneous written acknowledgment of the sale price to substantiate the deduction.3United States Senate. ACE Act – Accelerating Charitable Efforts Act
The practical effect is that the tax benefit for gifts of closely held stock or real estate would track real, realized value rather than a paper appraisal.
Changes That Reach Private Foundations
Private foundations already have to distribute roughly 5% of the fair market value of their non-exempt-use assets each year.5Office of the Law Revision Counsel. 26 USC 4942 – Taxes on Failure to Distribute Income The ACE Act would tighten what counts toward that 5% in two ways.
First, administrative expenses paid to disqualified persons (substantial contributors, their family members, and entities they control) would no longer count as qualifying distributions. Foundation managers who aren’t family members of other disqualified persons remain an exception, so a professional executive director without family ties to the donor could still be paid from qualifying distributions. This targets family foundations that pay relatives salaries or consulting fees and credit that spending against the 5% minimum.
Second, a private foundation could no longer meet its annual payout by transferring money into a DAF. Under current rules, that transfer counts as a qualifying distribution even if the funds then sit in the DAF indefinitely. The ACE Act would disallow grants to DAFs as qualifying distributions and require foundations to disclose any DAF contributions on their annual returns.
The Community Foundation Carve-Out
Not every DAF would be treated the same. A qualified community foundation, defined as one focused on four or fewer states and holding at least 25% of its total assets outside of donor advised funds, gets more flexible treatment for its DAFs when either of two conditions is met: the donor’s advisory privileges cover no more than $1 million across all accounts at that foundation, or the fund’s governing agreement requires annual distributions of at least 5%.3United States Senate. ACE Act – Accelerating Charitable Efforts Act Smaller, locally focused donors giving through community foundations would largely fall outside the bill’s tighter requirements.
What Would Not Change
One point worth flagging because it often causes confusion: the ACE Act would not open the door to qualified charitable distributions from IRAs to DAFs. Taxpayers aged 70½ or older already cannot direct a QCD to a donor advised fund, private foundation, or supporting organization under current law.6Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts That prohibition stays intact. If you want an IRA distribution to count as a QCD, it has to go to an operating public charity.
The statutory definition of a donor advised fund at 26 USC 4966 also stays where it is: a separately identified account at a sponsoring organization, over which the donor retains advisory privileges, with the sponsor as the legal owner.7Office of the Law Revision Counsel. 26 USC 4966 – Taxes on Taxable Distributions The ACE Act layers new rules on top of that structure rather than replacing it.