5 charitable giving questions clients may be asking at year-end
Coauthors:
Caleb Lund, CAP®
Director of Charitable Strategies Group
DAFgiving360™
Hayden Adams, CPA, CFP®
Director of Tax Planning and Wealth Management
Schwab Center for Financial Research
Eighty-five percent of households with $1M+ in assets give to charity annually.* For DAFgiving360, around 60% of contributions occur in the last four months of the year, which suggests that not only are donors valuing tax deductions, but perhaps also charitable holiday traditions.
With year-end 2025 fast approaching, clients may have some new questions about how the One Big Beautiful Bill Act (OBBBA) may impact their charitable giving and tax deductions this year and next. We’ve put together a list of common questions and answers to help you anticipate clients’ needs, provide answers, and spark meaningful conversations.
1. “Did the tax benefits of charitable giving change for 2025?”
No, the rules for tax deductions for charitable donations did not change for 2025.
- According to the IRS, the deduction limit for cash gifts to public charities, including donor-advised funds (DAFs), is 60% of adjusted gross income (AGI), while the limit for non-cash gifts (like stock) held more than one year is 30% of AGI. Deduction amounts over the 2025 limit may be carried forward up to five tax years.
Some of the tax rules will change in 2026, under the new One Big Beautiful Bill Act (OBBBA). Dive deeper into the OBBBA here: What the One Big Beautiful Bill Act means for charitable giving.
- First, total charitable donations must exceed 0.5% of AGI before a charitable donation deduction can be claimed. For example, with an AGI of $100,000, total gifts must be more than $500 before being deductible.
- Second, with all charitable deductions, we see the tax benefits limited to a maximum reduction in taxes of 35 cents on the dollar. This rule will only affect taxpayers in the 37% federal income tax bracket. A $100,000 donation would then give a person in the 37% tax bracket a maximum potential reduction in taxes of $35,000, instead of $37,000 under the old rules.
- Also beginning in 2026, donors who do not itemize deductions will be eligible for a $1,000 charitable deduction ($2,000 for married couples filing jointly) on top of the standard deduction for gifts made directly to qualified charities. Gifts must be cash and go directly to an operating charity—not to a DAF.
Moves to consider:
- Due to these changes, some donors who itemize deductions may want to increase their 2025 donations rather than waiting to give in 2026. Taking advantage of the tax deduction limits for 2025 may be valuable, especially for high-earning clients in the top tax bracket.
- Clients can also increase their charitable deduction amount to offset the tax liability on extra income received this year (like a Roth IRA conversion, for example).
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2. “What’s the IRS deadline for charitable donations, including contributions to donor-advised funds (DAFs)?”
The deadline for making charitable donations this year is December 31 if clients want to be eligible for a 2025 tax deduction.
- It’s important to know that it can sometimes take time for donations to be processed, especially certain investments and other non-cash assets, which have longer processing lead times.
Moves to consider:
- Start planning with clients as early as possible to avoid any potential delays. If you have clients that plan to be eligible for a 2025 charitable tax deduction and want to extend their giving into the coming years, consider a DAF. DAFs can allow donors to receive a charitable deduction now if the donation is made by December 31, and the timeline for donors to grant to their charities of choice is flexible: they could recommend grants now, in 2026, or later.
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3. “How can I give to charity if I take the standard deduction?”
Anyone can give to charity at any time, and we encourage charitable giving regardless of tax situations.
- This year, a client who takes the standard deduction won’t be able to claim a charitable tax deduction for 2025.
- The OBBBA will change that—beginning next year, non-itemizers will be able to take a charitable donation deduction of up to $1,000 for single filers or $2,000 for joint filers. But this donation must be made in the form of cash and go directly to an operating charity—which means it cannot be donated to a DAF.
Moves to consider:
- Qualified Charitable Distributions (QCDs): Clients age 70½ or older can give up to $108,000 per individual directly from a traditional IRA to an operating public charity in 2025. A QCD allows the client to give IRA assets without having to pay taxes and can meet their current year required minimum distribution (RMD) amount or help reduce future RMDs.
- Bunching contributions: Clients can combine multiple years’ worth of donations into one year to exceed the standard deduction threshold. This could allow the client to itemize deductions in 2025 and then take the standard deduction in 2026, with the potential for a universal charitable deduction on top, maximizing their tax benefits over that two-year period.
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4. “Can I use a DAF for my giving before year-end?”
Yes, a DAF is a great tool to use throughout the full year—donors can contribute to their DAF account and recommend grants to charities at any time.
- DAFs continue to grow in popularity with both donors and advisors, as more people become familiar with the tool and recognize the ease of use, tax benefits and their ability to make a greater charitable impact.
- One advantage of DAFs is the flexibility in timing charitable gifts, investments, and grants. Clients can contribute to their account and receive the immediate tax deduction, but they can select charities for grants over time. They can invest the contributed assets for potential tax-free growth while taking the time they need to research organizations and recommend grants.
- Plus, with a single contribution to their DAF account at DAFgiving360, donors can support multiple charities over time, with grants as small as $50. They can also contribute a wide variety of assets other than just cash (see question 5 below).
Moves to consider:
- If any of your clients are interested in or would benefit from being more strategic about their charitable giving, discuss setting up an account with DAFgiving360 and making a contribution before year-end, and they will be eligible for a 2025 tax deduction.
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5. “Can I donate cryptocurrency and other assets instead of cash?”
Yes, clients can donate cryptocurrency and other assets instead of cash. In fact, cash isn’t always the best asset for tax-smart donations. Gifts of appreciated non-cash assets (and held more than one year) can often provide a greater tax benefit for clients than selling those assets first and donating the after-tax proceeds.
Moves to consider:
- Donating appreciated assets like stocks, mutual funds, real estate or even cryptocurrency can help clients potentially eliminate capital gains tax on the sale, potentially increasing the amount available for charity by as much as 20%—while also allowing clients to qualify for a charitable tax deduction.
- Giving non-cash assets to a DAF can be even more efficient: DAFs often accept a broader range of assets than some charities can directly process.
- This strategy can be especially valuable in years when client portfolios have significant gains, so it’s worth discussing these options when reviewing and rebalancing your clients’ portfolios or during regular year-end planning conversations.
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What you can do next
Now’s the time to connect with clients on their plans for tax-smart, year-end giving.
- Visit DAFgiving360’s Advisor Resource Center for additional resources
- Help clients develop a giving plan with the DAFgiving360 Giving Guide
- Learn about account and investment options at DAFgiving360