Recent tax law changes have reshaped how and when charitable giving delivers a tax benefit. While generosity itself hasn’t changed, the rules governing deductibility have, and the differences are meaningful.
Beginning in 2026, provisions in the One Big Beautiful Bill Act (OBBBA), combined with historically high standard deductions, make how and when charitable gifts are made more important than ever. For donors considering a Donor-Advised Fund (DAF), this is an opportunity to revisit charitable planning with fresh eyes.
A Donor-Advised Fund is a charitable giving vehicle that allows individuals or families to contribute assets, receive an immediate charitable deduction, and recommend grants to qualified charities over time.
In practice:
DAFs are particularly useful for donors who want flexibility, allowing the tax decision to be made in one year while charitable support is distributed over many years.
Starting in 2026, the One Big Beautiful Bill Act (OBBBA) introduces a 0.5% Adjusted Gross Income (AGI) floor for charitable deductions for taxpayers who itemize.
In practical terms:
At the same time, the standard deduction remains historically high. Many households no longer itemize, which means charitable contributions may not provide a federal income tax benefit unless total itemized deductions exceed the standard deduction.
Together, these rules place greater emphasis on timing and structure rather than on generosity alone.
Charitable bunching is a long-standing planning strategy that has become increasingly relevant under current tax law. Instead of giving a similar amount to charity each year, a donor consolidates multiple years' worth of charitable contributions into a single tax year.
This larger gift can:
In the years that follow, the donor may take the standard deduction while still maintaining consistent charitable support.
The result is often the same total giving over time, but with a greater overall tax benefit.
| Feature | Annual Charitable Giving | Charitable Bunching Using a DAF |
| Giving pattern | Same amount given each year | Multiple years of gifts combined into one year |
| Ability to itemize | Often limited | More likely in the contribution year |
| Impact of 0.5% AGI floor | Smaller gifts may fall below threshold | Larger contribution clears the threshold |
| Timing of tax deduction | Spread over many years | Concentrated in one tax year |
| Timing of support to charities | Immediate, year by year | Ongoing via DAF grants |
| Flexibility | Limited | High |
Assume a married couple has:
They can still support their preferred charities annually by recommending grants from the DAF, while securing the tax benefit in the year it matters most.
Donor-Advised Funds make charitable bunching far easier to execute without disrupting long-term giving goals.
A donor can:
This structure provides flexibility and consistency, aligning tax efficiency with sustained philanthropic support.
A Donor-Advised Fund is a charitable giving account that allows a donor to make a contribution, receive an immediate tax deduction, and recommend grants to qualified charities over time.
DAFs are commonly used to:
Once assets are contributed to a DAF, they are irrevocably dedicated to charitable use, but the donor retains advisory privileges over how and when grants are distributed.
Charitable bunching is a strategy in which donors combine multiple years of charitable contributions into a single tax year to maximize itemized deductions.
Beginning in 2026, the OBBBA introduces a 0.5% of AGI floor, meaning only charitable contributions above that amount are deductible for itemizers.
DAFs allow donors to take a large deduction in one year while gradually distributing grants to charities.
High-income households or donors whose annual charitable giving typically does not exceed the standard deduction may benefit most.
Donor-Advised Funds and charitable bunching aren’t about giving more. They’re about giving with intention.
In a tax landscape shaped by higher standard deductions and new deduction thresholds, thoughtful timing and structure can make a meaningful difference.
As with any financial strategy, charitable planning should be reviewed annually with your financial advisor to ensure it remains aligned with your goals, cash flow, and overall tax picture.
If you’d like guidance on how strategies like these fit into your overall financial picture, the SDT team is here to help. Contact us to start a thoughtful conversation about your goals and next steps.
Sources & References:
Internal Revenue Service – Charitable Contributions and Donor-Advised Funds
Legislative summaries related to the One Big Beautiful Bill Act (effective 2026)
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax, or accounting advice. Clients should confer with their qualified legal, tax, and accounting advisors as appropriate.
CRN202901-10382026
Megan Robinson, FPQP™, CRPS®, serves as the investment coordinator at Spaugh Dameron Tenny, where she oversees account transfers, monitors client portfolios, and implements tailored investment strategies. With certifications in financial planning and retirement plan design, Megan ensures that the operational side of wealth management runs smoothly and accurately. Known for her attention to detail and client-first mindset, she plays a crucial behind-the-scenes role in providing executives, physicians, dentists, and retirees with efficient, coordinated financial care.
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