The $32,200 standard deduction for married couples has made itemizing charitable gifts impractical for most households, driving donors toward donor-advised funds and other vehicles that allow multi-year giving to be consolidated into a single tax year.
Fewer American households than ever can claim charitable gifts as itemized deductions, yet roughly three-quarters of U.S. adults report donating to charity each year, according to an Associated Press-NORC Center for Public Affairs Research survey. The gap between those two realities is reshaping how donors structure their philanthropy — and driving record adoption of donor-advised funds that let taxpayers front-load years of giving into a single tax year.
"Donor-advised funds are really the most flexible and cost effective charitable giving vehicle available," said Kathy Roeser, a financial advisor in the Wealth Management Division of Morgan Stanley in Chicago. "Unless they're thinking millions of dollars, I have people consider donor-advised funds."
The standard deduction for married couples filing jointly now stands at $32,200, a threshold that makes itemizing impractical for most households. Taxpayers who do itemize can only deduct charitable donations exceeding 0.5 percent of adjusted gross income. A donor-advised fund circumvents both constraints: a taxpayer deposits cash or appreciated securities, claims an immediate charitable income tax deduction, then directs grants to qualified charities over time while the assets grow tax-free.
The "batching" strategy is central to the DAF appeal. A donor planning to give $10,000 annually could instead deposit $50,000 into a DAF in one year, take the full deduction, then distribute $10,000 per year over five years. Gifting appreciated securities compounds the benefit. A client holding $100,000 in appreciated stock who sells it as a short-term capital gain would net roughly $70,000 or less after taxes to donate. Transferring the same stock directly to a DAF preserves the full $100,000 for charitable purposes while generating a $100,000 tax deduction, said Robert Cucchiaro, president of Summit Wealth & Retirement Partners in Eagle, Idaho.
Sponsors range from national custodians such as Charles Schwab, Vanguard, Morgan Stanley and J.P. Morgan to community foundations like the Chicago Community Trust, which has operated a DAF program since 1985. Account holders can typically initiate a grant to any qualified 501(c)(3) charity with a few clicks, and the sponsor handles record-keeping and compliance.
Charitable trusts and foundations serve larger gifting needs
For families gifting larger dollar amounts, charitable trusts wrap donations into a broader estate planning framework. A charitable remainder trust provides income to the donor during their lifetime, with remaining assets passing to charity at death. A charitable lead trust operates in reverse — the charity receives payments for a set period before assets pass to heirs.
Private foundations offer the most control but carry the heaviest administrative burden. A foundation maintains its own bylaws, is managed by trustees or directors, and may require dedicated staff or ongoing professional fees. Unlike DAFs, which can only make grants to 501(c)(3) charities, foundations can fund individual scholarships or other non-charitable beneficiaries. Yet for most donors, the added flexibility rarely justifies the cost, advisors say.
"Private foundations are way more complex and more expensive to maintain," said Patti Winegar, who with her husband Steve established a DAF in 2017 after considering a foundation. The couple used the vehicle to support Breakthrough T1D and the Off the Street Club, a youth center on Chicago's West Side.
DAFs also enable multigenerational philanthropy without foundation-level governance. Families can establish a shared fund, set a mission and decision-making framework, and involve younger members in grant decisions. Some families create individual DAFs for children to encourage their own giving priorities.
The shift toward structured giving vehicles reflects a broader reality: as the standard deduction continues to outpace typical annual charitable contributions, the tax code increasingly rewards donors who think in multi-year cycles rather than writing annual checks. For taxpayers facing a windfall year — a large bonus, stock sale or retirement account distribution — bunching charitable gifts into a DAF can convert what would otherwise be a non-deductible expense into a meaningful tax offset.
This article is for informational purposes only and does not constitute professional advice. Tax rules and figures cited reflect current law as of publication; readers should verify against the latest official IRS guidance and consult a qualified tax advisor for their individual circumstances.
