When people hear the term donor-advised fund (DAF), they often imagine it’s something reserved for ultra-wealthy philanthropists or families with foundations. But the truth is, DAFs are very accessible, even while in the accumulation stage of your financial life. With changes from the One Big Beautiful Act bill (OBBBA), which will take effect in 2026, there are changes to charitable deductions that will be important to note. The act permanently raises the standard deduction to $15,750 for singles and $31,500 for couples in 2025. That’s beneficial for simplifying taxes, but it means fewer people will itemize and won't benefit from traditional charitable deductions. Think of a DAF as a charitable investment account: · You contribute money (cash, stocks, or other appreciated assets) · You receive an immediate tax deduction · You recommend grants to your favorite nonprofits over time What makes DAFs especially powerful is that they allow you to separate the act of giving from the act of granting. That means you can contribute during a high-income year or through a lump sum to get the tax benefit and then decide later how and when to distribute those funds to causes you care about. Starting in 2026, even if you don’t itemize, you’ll get an “above-the-line” deduction of up to $1,000 for singles and $2,000 if married for qualified cash donations. It’s limited, but it still lowers your taxable income and encourages giving. For your stage of life, a DAF offers flexibility and tax efficiency, and there are a couple of elements that can maximize the benefit: · Bunching strategy: Make a lump-sum donation in a year you expect high income, claim the full tax deduction, and then grant the funds to charities. · Tax-timing advantage: Donate appreciated assets before year-end to maximize deductions while avoiding capital gains. · Grow-your-fund: Invest the DAF assets so your charitable capital can continue growing, just like your investment account.
A donor-advised fund helps you take full advantage, matching your financial growth with meaningful, flexible giving by helping to align your values with your financial strategy, no matter where you are in your wealth journey. If you’d like to discuss this in more detail, let’s connect and see how DAFs can be utilized in your portfolio, not only as a financial strategy but also to give back to what’s important to you. |
You Don’t Have to Be a Millionaire to Give Like One
