Donor-Advised Funds: A Flexible Way to Make Your Giving Go Further
If giving back is part of who you are, there's a good chance you're already writing checks to causes you care about. But if you're giving from your income rather than your assets, you may be leaving real tax savings on the table — and missing chances to make your generosity go further.
One of the most flexible tools in tax-smart charitable giving is the Donor-Advised Fund (DAF). Here's what it is, how it works, and why 2026's tax law changes make it worth a fresh look.
Why Giving Strategy Matters More in 2026
The standard deduction for 2026 rose to $16,100 for single filers and $32,200 for married couples filing jointly. That's good news for simplifying your taxes, but it also means fewer people benefit from itemizing charitable deductions the old-fashioned way — a one-time gift often isn't enough to clear that bar.
On top of that, 2026 introduced a new 0.5% of AGI floor on itemized charitable deductions: only the portion of your giving above 0.5% of your adjusted gross income is deductible in the year you give it (though the disallowed portion can generally be carried forward). For high earners in the top bracket, a cap on the value of itemized deductions reduces the benefit further.
None of this means giving less. It means being more intentional about how and when you give. That's where a DAF can help.
What Is a Donor-Advised Fund?
A DAF is a giving account you open through a sponsoring organization. You contribute cash, appreciated stock, or other assets, take an immediate tax deduction in the year you contribute (if you itemize), and then recommend grants out to your favorite charities on your own timeline — this year, next year, or over many years.
Why People Use DAFs
- Bunching deductions. If your itemized deductions are close to the standard deduction threshold, contributing several years' worth of giving into a DAF in one year can push you over the line to itemize — then you take the standard deduction in the leaner years. With the new 0.5% AGI floor, bunching can also help make sure more of a given year's gift clears the floor and is actually deductible.
- Gifting appreciated assets. Donating long-held stock or funds directly to a DAF lets you avoid capital gains tax on the appreciation while still deducting the full fair market value — generally up to 30% of AGI for appreciated securities to public charities.
- Flexibility and legacy. You can involve family members as advisors, teach the next generation about giving, and take your time deciding which organizations to support.
- No age requirement. A DAF is available at any age, funded from any account — not just an IRA.
A Few Things to Keep in Mind
- DAF contributions are irrevocable. Once the money is in the fund, it's committed to charitable purposes, even though you retain advisory privileges over where it goes.
- A DAF contribution is a deduction, not an exclusion. You only benefit if you itemize, and the gift is still subject to the new 0.5% AGI floor and the AGI percentage limits for the asset type you're giving.
- Grant timing is separate from contribution timing. You get the deduction when you fund the DAF, not when grants go out to charities — which is exactly what makes bunching possible.
How a DAF Differs from a QCD
A Qualified Charitable Distribution (QCD) is a different tool, built for a different purpose, and the two don't substitute for each other:
| DAF | QCD | |
|---|---|---|
| Minimum age | None | 70½ |
| Funding source | Cash, stock, and other assets | IRA only |
| Counts toward RMD | No | Yes |
| Tax treatment | Deduction (requires itemizing) | Exclusion from income (helps even if you don't itemize) |
| Can a QCD fund it | — | No — QCDs cannot be directed to a DAF |
| 2026 annual limit | No federal limit | $111,000 per person |
The practical difference: a QCD is generally the most tax-efficient dollar you can give once you're 70½ and holding IRA assets, because it never touches your AGI at all. A DAF is the more flexible vehicle for appreciated assets, for giving before age 70½, or for bunching several years of giving into one deduction. For many people, the right answer is to use both — just for different assets and different seasons of life.
Where to Go From Here
Charitable giving works best when it's built into your broader financial plan, not treated as an afterthought each December. Whether that means funding a donor-advised fund with appreciated stock, directing this year's RMD straight to the causes you love through a QCD, or coordinating both, the right structure depends on your income, your assets, and what you're hoping your giving accomplishes.
If you'd like to talk through what makes sense for your situation, reach out to our team at team@planningforgood.co or 877-568-7526. We'd love to help you give in a way that reflects both your values and your financial picture.
This article is for general educational purposes and isn't personalized tax or investment advice. Please consult your tax advisor about your specific situation. Planning for Good, LLC is a hybrid practice under Cambridge Investment Research.
Written with the assistance of AI, reviewed and finalized by Karen Melo Ticas, CFP®.