Many clients want to give charitably, but timing, tax treatment, and implementation details can significantly affect the outcome.
Donor-advised funds (DAF) have become an increasingly common planning tool for clients with higher-income years, concentrated investment gains, or growing philanthropic intent. For CPAs and other professionals, recognizing when a DAF may be appropriate can create opportunities for more coordinated, tax-efficient planning.
A donor-advised fund (DAF) is a charitable account that allows clients to separate the timing of their tax deduction from when charitable gifts are ultimately distributed. This can create flexibility, particularly during higher-income years or when clients want to be more intentional about how and when they give.
If helpful, we’ve also provided a client-friendly overview of donor-advised funds and their role in broader charitable planning: Donor-Advised Funds, the OBBBA, and Why Charitable Bunching Matters.
While the concept itself is relatively straightforward, the planning opportunity often depends on timing, income level, and the types of assets involved.
A DAF may be worth exploring when clients:
| Situation | Why It Matters |
| High-income year | Creates opportunity for larger deduction |
| Appreciated investments | May help improve tax efficiency in certain situations |
| Consistent giving | Allows for structured planning |
| Multiple charities | Simplifies administration |
| Family involvement | Encourages intentional decision-making |
The practical value of a donor-advised fund is often easier to see in context.
Case: David and Maria, ages 54 and 52
After 20 years of building a surgical practice, David sells a minority stake and receives a $300,000 payout. The additional income increases their tax exposure.
They typically give about $15,000 annually to their church and several organizations, but due to the standard deduction and SALT limitations, they receive limited tax benefit from itemizing.
Their CPA introduces the concept of a donor-advised fund.
Instead of giving $15,000 annually, David and Maria contribute $60,000 of appreciated mutual fund shares in a single year.
They can still grant $15,000 annually from the DAF to support their preferred organizations.
The DAF provider issues a single consolidated charitable receipt, reducing administrative complexity and simplifying tax reporting.
David and Maria involve their children in researching organizations and recommending grants, which creates a more intentional and repeatable approach to giving.
The CPA identified the opportunity at the right time and worked with the client to evaluate opportunities to:
Implementation is coordinated with a financial planner to ensure alignment with long-term goals.
Like with many planning strategies, the value of a donor-advised fund often comes down to execution.
Even when charitable intent is clear, a few details can limit the effectiveness of a donor-advised fund:
This is also where collaboration between professionals can become especially important.
Donor-advised funds often surface during tax conversations, but their full value tends to come from how they’re implemented over time.
In many cases:
This shared visibility can help ensure that decisions made in one area support the overall financial picture.
One of the primary advantages of a donor-advised fund is flexibility. Clients can make a charitable contribution, receive a potential tax deduction in that same year, and then distribute grants to charities over time rather than making immediate giving decisions.
This can be especially valuable during high-income years, liquidity events, or years when a client wants to maximize itemized deductions.
Yes. Many clients fund donor-advised accounts with appreciated securities such as stocks, mutual funds, or other non-cash assets.
In many cases, donating appreciated investments directly to a DAF may allow clients to avoid paying capital gains tax on the appreciation while still potentially receiving a charitable deduction for the asset’s fair market value, subject to IRS rules and limitations.
No. Donor-advised funds are designed to provide flexibility over time.
Once contributions are made, funds can remain invested within the account, and grants can be distributed gradually based on the client’s charitable priorities and timeline. This allows clients to separate the timing of their tax deduction from the timing of their charitable giving.
Not necessarily. While donor-advised funds are often associated with high-net-worth individuals, they can also be useful for clients who consistently give to charity, own appreciated assets, receive irregular income, or want to simplify their giving process.
A DAF may be especially beneficial during years involving a business sale, large bonus, stock option exercise, inheritance, or other significant financial event.
A donor-advised fund can simplify charitable tax documentation by consolidating contributions into a single account.
Instead of tracking receipts from multiple charities throughout the year, clients typically receive one contribution acknowledgment from the DAF sponsor for tax reporting purposes. This can help streamline recordkeeping for itemized deductions while creating a more organized approach to charitable planning.
If a client is approaching a high-income year or considering structuring their giving more intentionally, we can help evaluate whether a donor-advised fund is a fit for their broader financial plan and coordinate alongside you if it makes sense to move forward.
This material is provided for general informational purposes only and does not constitute tax, legal, or investment advice. The examples provided are for illustrative purposes and do not represent the experience of any specific individual. Equity compensation decisions involve complex tax and financial considerations and should be evaluated in consultation with a qualified tax advisor, financial professional, and other appropriate advisors based on individual circumstances.
Tax benefits discussed are general in nature and may not apply to all investors. Deductibility and tax outcomes depend on individual circumstances, IRS limitations, and applicable law.
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Shane Tenny, CFP®, is Managing Partner of Spaugh Dameron Tenny, where he helps high-net-worth individuals and families navigate complex financial decisions with clarity, structure, and confidence. Since joining the firm in 2000, Shane has worked with clients through major financial transitions, including career changes, liquidity events, retirement, and multigenerational planning. His approach combines comprehensive financial planning with a focus on behavioral finance, including advanced studies in Behavioral Economics through the University of Chicago Booth School of Business. Shane is the author of Your Next Million, former host of the Prosperous Doc® Podcast, and a nationally recognized financial advisor, speaker, and educator.
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