What every donor should know about tax-efficient donations.
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The landscape of charitable giving has shifted. With new federal tax rules now in effect for 2026, many donors are rethinking how they support their favorite causes. Whether you are a casual giver or a long-time philanthropist, understanding these changes—and utilizing tools like a donor-advised fund (DAF)—can help your dollars go much further.
What’s New?
Before diving into strategies, it is important to understand the three key pillars of the current tax law:
The “universal” deduction: Even if you don’t itemize, individual filers can now deduct up to $1,000 ($2,000 for married couples) for charitable gifts “above the line.”
The 0.5 percent floor for itemizers: If you do itemize, you can only deduct contributions that exceed 0.5 percent of your Adjusted Gross Income (AGI). This makes smaller, frequent gifts less tax-efficient than they used to be.
High-income caps: Itemized deductions for those in the highest tax brackets are now capped at 35 percent, encouraging a shift toward more tax-efficient assets like stocks.
The Solution
A DAF is essentially a personal charitable savings account. You contribute to the fund, realize an immediate tax benefit, and then recommend grants to nonprofits over time.
A DAF leverages the “bunching” strategy—donating a large “anchor” amount in one year to easily clear the 0.5 percent AGI floor, then distributing those funds to the charities you choose over the following years.
Get Started in 3 Steps
Choose your sponsoring organization: Select a “sponsor” to host your account, such as a national provider (e.g., Fidelity, Schwab, or Vanguard), a community foundation, or a religiously affiliated organization.
Fund your account with non-cash assets: While you can contribute cash, the real power lies in appreciated stocks or cryptocurrency. Donating these directly allows you to eliminate capital gains taxes and often claim a deduction for the full fair market value.
Grow and grant: Once assets are in your DAF, they can be invested to grow tax-free. You can then log in at any time to recommend a grant to any qualified 501(c)(3) nonprofit, such as Hearing Health Foundation.
Quick Checklist
To set up your DAF, it helps to have the following ready:
Social security numbers and addresses for all account holders.
Contact info for who will manage the fund after you or a specific charity to receive the remaining funds after you pass.
A name for your account (e.g., “The Smith Family Fund”).
Brokerage account numbers and/or crypto wallet addresses for transferring funds into the DAF. Most DAFs also require a linked bank account.
The new tax code changes deductions around charitable giving, but a DAF can help ensure your impact and tax savings are both maximized.
This material is for informational purposes only and is not intended to provide tax, financial, or accounting advice. Please consult your own tax, financial, and/or accounting advisers.
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Whether you are a casual giver or a long-time philanthropist, understanding these changes—and utilizing tools like a donor-advised fund (DAF)—can help your dollars go much further.