The short version
You contribute cash or, better yet, appreciated assets to a DAF held at a sponsoring organization. You generally get the full charitable deduction in the year you contribute, even though you can spread the actual grants to your favorite charities across many years. The fund can invest the balance in the meantime, so the money can grow before it is granted out.
For someone in the distribution phase who knows they want to give but has not settled on exactly where or when, a DAF lets you capture the tax benefit in a high-income year and stay thoughtful about the giving itself.
Why DAFs matter more under OBBBA
The One Big Beautiful Bill Act changed the math on charitable giving starting in 2026, and most of those changes make a DAF more attractive, not less.
- Itemizers now face a new floor: only charitable contributions above 0.5% of your adjusted gross income are deductible. Small annual gifts can fall under the line and produce no deduction at all.
- For donors in the top 37% bracket, the tax value of itemized deductions, including charitable gifts, is now effectively capped at 35 cents on the dollar.
- The higher standard deduction was made permanent, so far fewer people itemize in any given year.
The strategy that answers all three is bunching: instead of giving a moderate amount every year, you concentrate several years of giving into one contribution to a DAF. That single large gift clears the 0.5% floor decisively, lets you itemize in that year, and then funds your grants for years to come while you take the standard deduction in the off years.
The appreciated-asset advantage
One important limit: the new above-the-line deduction for non-itemizers ($1,000 single, $2,000 joint for 2026) does not apply to gifts to a donor-advised fund. That deduction is for direct cash gifts to operating charities only.
The single biggest reason to fund a DAF with long-term appreciated stock rather than cash: you generally deduct the full fair market value and you never pay capital gains tax on the built-in gain. The charity, and your DAF, receive the whole pre-tax value.
The AGI ceilings still apply
OBBBA kept the existing annual deduction ceilings. Cash gifts to public charities, including most DAF sponsors, remain deductible up to 60% of AGI. Gifts of long-term appreciated property are generally limited to 30% of AGI. Anything you cannot use this year carries forward for up to five years.
Where this trips people up
Treating a DAF as a way to avoid ever granting
A DAF is meant to move money to working charities. It is a holding and timing tool, not a permanent parking spot. Build a plan to grant the balance out over a reasonable horizon.
Funding with cash when you hold appreciated stock
If you have low-basis stock, funding the DAF with cash and keeping the stock is usually the more expensive choice. The appreciated shares are the better gift.
Forgetting the contribution is irrevocable
Once assets go into a DAF they are legally the sponsor's. You keep advisory privileges over grants and investments, but you cannot take the money back for personal use.
Donor-advised fund questions people ask
What is a donor-advised fund?
A charitable giving account at a sponsoring organization. You contribute assets, take the deduction in the contribution year, and then recommend grants to qualified charities over time while the balance can be invested.
Why is bunching into a DAF a 2026 strategy?
Because OBBBA added a 0.5% of AGI floor for itemizers and made the higher standard deduction permanent. Concentrating several years of giving into one DAF contribution clears the floor and lets you itemize in that year.
Can non-itemizers use the new $1,000 deduction for a DAF gift?
No. The above-the-line deduction for non-itemizers applies only to direct cash gifts to operating charities, not to contributions to a donor-advised fund.
Should I fund it with cash or stock?
If you hold long-term appreciated stock, funding with the shares is usually better. You generally deduct full fair market value and avoid the capital gains tax you would owe if you sold.
How much can I deduct in one year?
Up to 60% of AGI for cash and generally 30% of AGI for long-term appreciated property, with a five-year carryforward for amounts above those limits.
Keep reading
Giving appreciated stock
Why donating shares beats donating cash, and how the deduction works. →
Qualified charitable distributions
If you are 70.5 or older, a more direct route straight from your IRA. →
Strategic gifting to heirs
Moving wealth to family under the 2026 gift and estate rules. →
All resources
Browse every explainer in one place. →
Thinking about a giving strategy that actually fits the new rules?
The 2026 changes reward planning and punish giving on autopilot. If you are weighing a donor-advised fund or trying to time a large gift, I am happy to help you map it out. Here is how to start a conversation.
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Andrew Sedlacek, CPA
Founder, OGCPA
Andrew is a Certified Public Accountant and the founder of OGCPA. He built his tax career at a local Bend firm and on Deloitte's tax team before founding the firm in 2019, and began professionally as a licensed financial advisor. He focuses on equity compensation, liquidity events, and the tax side of charitable giving and wealth distribution, and serves as the tax subject-matter expert for a venture-backed AI company. He works with clients across Bend, Oregon and the San Francisco Bay Area.
This article is general information, not tax or legal advice for your specific situation. Tax outcomes depend on your individual facts, and the rules change over time. Figures cited reflect 2025 and 2026 amounts and the changes made by the One Big Beautiful Bill Act. Talk to a qualified professional (I am happy to be that person) before acting on anything here. Reading this page does not create a client relationship.