Tax-smart charitable giving strategies
Charitable giving through a donor-advised fund (DAF) can help you reduce taxes while maximizing your philanthropic impact—it’s a win-win for charitably-minded investors.
That’s why donor-advised funds are the fastest-growing*, most tax-efficient way to give to charity in the U.S. Explore our charitable tax strategies, tools, and resources below to help you make informed giving decisions.
Tax benefits of donor-advised funds
DAFs offer unique benefits that simplify tax planning, allow charitable investments to grow tax-free, and ultimately unlock more money for charities over time. Discover how a DAF account at DAFgiving360® can help you save on taxes and give more to charity.
Qualify for a tax deduction
Eligible contributions to a DAF may receive a current-year tax deduction—with the flexibility to recommend grants to charities immediately or over time.
Reduce capital gains taxes on appreciated assets
Contributing long-term appreciated assets, like donating stock or real estate, may eliminate capital gains taxes that could apply if the assets were sold first.
Grow charitable funds in the account tax-free
Contributed assets can be invested and potentially grow tax-free, increasing the amount available for future charitable grants.
Simplify recordkeeping at tax time
DAFs keep tax records and receipts of charitable contributions in one place, making tax time simpler.
Lower tax liability during major income changes
Charitable donations can reduce your taxable income during unexpected windfall years, such as receiving an inheritance, selling a business, earning a bonus, or other high-income events.
Incorporate into estate plans
Minimize estate taxes by incorporating DAFs into your estate planning strategy—with succession plan options available to extend your giving and philanthropic legacy.
Frequently asked questions (FAQs)
Find answers to the most common questions on taxes, charitable giving, and donor-advised funds.
Yes; charitable donations to a donor-advised fund are generally tax deductible if you itemize deductions and meet IRS requirements.
In most cases, donors must itemize deductions on their federal tax return to claim deductions on their charitable contributions.
If you’ll take the standard deduction for your 2026 taxes, the One Big Beautiful Bill Act (OBBBA) allows you to deduct an additional amount for your cash contributions to qualified operating charities: up to $1,000 if you’re a single filer or $2,000 if you’re a joint filer. Note that a DAF is not an operating charity, so the charitable deduction can’t be used for DAF contributions.
Overall deductions for contributions to public charities, including DAFs, are generally limited to 50% of your adjusted gross income (AGI). The limit increases to 60% of AGI for cash contributions. For appreciated non-cash assets held more than one year, the limit is 30% of AGI.
Anyone who itemizes and wants to take a deduction for a charitable donation will need to exceed 0.5% of their AGI before they can claim that donation as an itemized deduction.
Based on the OBBBA tax laws, if you’re in the 37% income tax bracket, the OBBBA caps the value of your itemized deductions, including charitable deductions, at 35%.
If your charitable deduction exceeds your AGI limit in 2026, you can carry the excess deduction amount forward in up to five additional tax years (while still staying within your AGI limit for each year).
Capital gains taxes are taxes on the profit earned from selling an asset that has increased in value, such as stocks, mutual funds, real estate, or business interests. The tax is generally based on the difference between the asset’s sale price and its original cost basis.
Many donors choose to donate long-term (held more than one year) appreciated assets directly to a donor-advised fund instead of selling them first because it may help eliminate capital gains taxes while potentially qualifying for a charitable tax deduction.
To qualify for a 2026 charitable tax deduction, your charitable contribution must be received by December 31, 2026. For more complex assets, additional processing time may be required, and contribution deadlines may fall earlier, often in November. Review our Charitable Giving Deadlines for asset-specific deadlines.
The IRS has specific documentation rules depending on the value of your non-cash asset donation:
Under $500: Provide a receipt or written acknowledgment from the charity showing the organization's name, date of contribution, and a description of the donation.
Over $500: You must complete IRS Form 8283 (Noncash Charitable Contributions) and attach it to your tax return.
Over $5,000 per item: You must obtain a qualified, independent appraisal and attach the signed appraisal summary to your Form 8283.
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Discover how a donor-advised fund can help you support the causes you care about with tax-efficient charitable giving.