The State of Play: Navigating the Current Landscape of QCD Legislation and DAF Regulations

For planned giving officers, staying abreast of the shifting sands in Washington is an operational necessity. As we cross the midpoint of 2026, the regulatory and legislative environment surrounding Qualified Charitable Distributions (QCD) and donor-advised funds (DAFs) seems stuck in familiar duality: a flurry of introduced concepts coupled with a deeply gridlocked path forward.

The Regulatory Waiting Game: Regulations under Section 4966

On the administrative front, we continue to operate under the shadow of the Internal Revenue Service’s proposed regulations under Section 4966 (REG-142338-07). Intended to clarify the excise taxes on taxable distributions from DAFs, these regulations remain in the proposed phase while the IRS sorts through thousands of public comments that arrived after the public hearings. The core friction centers on the definitions of “donor-advisor” and “distribution,” particularly concerning independent personal investment advisors who manage DAF assets.

Until these regulations are finalized or substantially amended, charitable gift planners are left advising donors amidst ambiguity. Some DAF sponsors have proactively tightened their internal review processes, but formal, binding guidance from the IRS remains elusive.

On the Horizon: The Charity Parity Act

While DAF rules are stalled at the IRS, new legislative concepts continue to emerge in Congress. The most notable recent development is the bipartisan introduction of the Charity Parity Act (H.R. 8783/S. 4511) in mid-May. Sponsored by Representatives Mike Kelly (R-PA) and Don Beyer (D-VA) alongside Senators Kevin Cramer (R-ND) and Chris Coons (D-DE), the bill aims to streamline the mechanics of giving from retirement accounts.

Currently, the Qualified Charitable Distribution (QCD) allows individuals age 70½ or older to transfer up to $111,000 annually tax-free to an eligible charity, but this mechanism is strictly limited to Individual Retirement Accounts (IRAs). Donors holding assets in employer-sponsored defined contribution plans, such as 401(k), 403(b), or 457(b) plans, must navigate a multi-step process – first rolling those assets into an IRA before making their charitable gift. This process introduces confusion, delays, and potential fees.

The Charity Parity Act seeks to eliminate this friction by granting QCD eligibility to other qualified retirement accounts. Notably, the bill mirrors the existing IRA QCD rules, keeping the same annual limitations and maintaining the exclusion of DAFs, private foundations, and supporting organizations as eligible recipients. While some advocates have proposed that DAFs be added to future iterations of the Bill, the initial framework keeps them separate.

Flashback: The Accelerating Charitable Efforts (ACE) Act 

The exclusion of DAFs from retirement rollovers is tied to a decade-long policy debate. Recall the Accelerating Charitable Efforts (ACE) Act, championed by Senators Angus King and Chuck Grassley. The ACE Act represented the high-water mark of legislative reform attempts, proposing a 15-year payout requirement for standard DAFs and a 50-year horizon for more complex funds to accelerate the timeline by which charitable dollars reach operating charities. Though the bill generated intense discussion, it lacked the necessary consensus to advance and stalled.

The Reality of Passage in the Current Congress

Despite the optimism surrounding the bipartisan introduction of the Charity Parity Act and ongoing discussions about a potential “SECURE 3.0” retirement package, the structural reality of the current Congress is that passage of any major standalone charitable legislation is highly unlikely. Sweeping tax overhaul enacted in late 2025 – the One Big Beautiful Bill Act – exhausted much of the legislative appetite for major tax policy adjustments, leaving Capitol Hill focused primarily on oversight and implementation.

Furthermore, the broader debate surrounding DAF regulation reflects a fundamental lack of consensus within the philanthropic sector itself. On one hand, community foundations, national commercial DAFs, and wealth managers are engaged in lobbying efforts to preserve or expand the flexibility, anonymity, and long-term investment benefits that have made DAFs the fastest-growing vehicle in philanthropy. On the other hand, some advocacy groups and policy institutes argue that charitable capital is accumulating in DAFs without sufficient urgency to address immediate societal needs.

Absent an industry-wide consensus or an economic catalyst, standalone legislative reform is likely to remain conversational rather than statutory for the remainder of this Congress. For planned giving officers, the immediate path forward is to keep the Charity Parity Act on the radar as an indicator of where charitable giving from retirement accounts may eventually go for all donors and manage DAF donors with an eye on the pending IRS Section 4966 Regulations.