A bipartisan group of U.S. senators introduced legislation that would increase giving options for older Americans who want to support churches and ministries with funds from their retirement accounts. Specifically, it would allow a qualified charitable distribution (QCD) from an individual retirement account (IRA) to be directed to a donor-advised fund (DAF).

While traditional IRA distributions are generally taxable, IRA owners age 70½ and older can elect to make tax-free charitable donations (up to $111,000 in QCDs for the 2026 tax year). Claiming a QCD does not require itemizing taxes, but a donor still must obtain a written gift acknowledgement from any nonprofit they support. IRA owners age 73 or older can count such QCDs toward their account’s annual required minimum distribution (RMD).

However, under current law, QCDs are not eligible to go towards DAFs, giving vehicles that allow donors to receive an immediate tax deduction for donated funds that may be invested, grown, and distributed to charities. The IRA Charitable Rollover and Enhancement Act, sponsored by Senators Todd Young (R-Ind.), Michael Bennet (D-Colo.), James Lankford (R-Okla.), Catherine Cortez Masto (D-Nev.), and Maria Cantwell (D-Wash.), would amend the tax code to change this.

“Charitable giving has long been a way for Americans to support their local communities and causes they believe in,” said Young. “Our bill will make a small fix to the tax code to enable more flexibility for older Americans to generously give to the people, places, and organizations they care about.”

According to the DAF Research Collaborative’s 2025 DAF Report, DAFs have surged in popularity in recent years and are supported by a wide range of nonprofit organizations. In the latest data for 2024, more than 3.5 million DAF accounts now hold $326.45 billion in assets, a record high. DAFs granted nearly $65 billion to charities in 2024 with a 25.3% payout rate, continuing the trend of payout rates higher than 20% annually.

Writing in support of the legislation, the Indiana Philanthropy Alliance highlighted DAFs as a practical way to allocate giving to multiple nonprofits, but said the current restriction on QCDs going to DAFs “creates frustration and inefficiency.”

“Donors who want to support several small charities in their hometown often cannot do so through a single rollover transaction,” the Alliance wrote. “Instead, they must direct the full distribution to one organization or navigate workarounds that limit flexibility.”

They suggested one unintended consequence is that donors may reduce their charitable giving.

Of note, Senator Cortez Masto emphasized, “This simple, commonsense fix will make it easier for Americans to give donations to the causes that they value and will spur more people to invest in their communities.”

Is your organization pursuing special gifts like QCDs? Explore more through ECFA’s fundraising resource, “4 Steps to Help Attract Special Gifts for Your Ministry.”