Donor-advised fund giving surges as tax cuts expire and shares soar

A model of this text first appeared in CNBC’s Inside Wealth publication with Robert Frank, a weekly information to the high-net-worth investor and shopper. Enroll to obtain future editions, straight to your inbox.

Sturdy inventory market returns and tax reform gave a lift to charitable giving in 2025, in response to DAFgiving360, one of many largest directors of donor-advised funds.

The group reported that its donors granted a report $9.9 billion to charities in 2025, a rise of $2.2 billion, or 28%, from the prior 12 months.

Donors can contribute money or belongings to donor-advised funds, or DAFs, and get an instantaneous tax deduction earlier than they determine the way to distribute their reward to charities. For donors who wish to offload appreciated belongings with out paying capital features tax, it is a lot easier to provide inventory or different non-cash belongings to a DAF than on to a nonprofit. Till the donor-advised fund makes grants to charities, the belongings proceed to understand.

Julie Sunwoo, president of DAFgiving360, advised CNBC {that a} report 74% of contributions final 12 months have been made within the type of non-cash belongings, together with ETFs, index funds, actual property and cryptocurrency.

“When you have issues like appreciated belongings or issues which might be tough to liquidate, DAFs actually excel at serving to individuals do this, put it right into a portfolio, after which develop an actual plan round how they wish to make it out to charity and take their time,” she stated.

Sunwoo credited a lot of the surge to the passage of President Donald Trump’s One Large Lovely Invoice Act in July, which decreased a number of tax advantages for high-income donors beginning in 2026.

Many legal professionals and tax advisors to the rich recommended shoppers final 12 months to ramp up their charitable giving in an effort to make the most of expiring tax advantages. For high earners, the efficient tax good thing about charitable giving has been minimize from 37% to 35%. The Indiana College Lilly Household College of Philanthropy estimated final 12 months this cover alone will scale back giving by $4.1 billion to roughly $6.1 billion yearly.

As well as, the invoice restricted tax incentives for itemizers, who will solely be capable of deduct donations in extra of 0.5% of their adjusted gross earnings. As an illustration, a taxpayer with $2 million in earnings would obtain no tax profit for his or her first $10,000 in annual giving, in response to tax planner David Perez.

Perez stated he suggested shoppers to fund their DAFs with 3 to five years price of contributions earlier than the tax modifications took impact. As soon as the DAF is loaded up, they will nonetheless unfold out their donations to charities over a number of years.

He stated he expects the tax legislation modifications to proceed to shift donors away from checkbook philanthropy. As an illustration, DAFs can’t be used to purchase tickets to galas or charitable occasions, which might be partially deductible if the taxpayer purchased it immediately from a charity, in response to Perez. And whereas DAFs are handy to arrange, recommending a grant out of your DAF takes extra effort and time than writing a examine, he stated.

“If they honestly wish to do it the proper means, which is thru their donor-advised fund, now they need to undergo that entity or car to contribute,” he stated. “They’re gonna begin considering, ‘Do I wish to undergo the difficulty of doing this?'”