Key Takeaways – Total donor-advised fund assets reached $326.45 billion in 2024, up 27.5%, with Fidelity Charitable alone distributing a record $14.9 billion in grants. – The One Big Beautiful Bill Act (OBBBA), effective January 1, 2026, introduces a 0.5% AGI floor on itemized charitable deductions, making the first $1,500 of a $300,000 AGI non-deductible for itemizers. – A new above-the-line charitable deduction of $1,000 (single) / $2,000 (MFJ) applies to direct cash gifts to public charities, but specifically excludes contributions to donor-advised funds. – The OBBBA creates a two-tier charitable tax system that requires different strategies by income band. Advisors who apply a single approach across their book will misserve a portion of clients. – Contributing appreciated stock to a DAF remains the most tax-efficient path for high-net-worth donors: full fair market value deduction, zero capital gains recognition.
Fidelity Charitable distributed a record $14.9 billion in grants in fiscal year 2024, up 25% year over year, as donors accelerated contributions ahead of the One Big Beautiful Bill Act’s scheduled 2026 changes to charitable deduction rules. Total assets across all donor-advised funds reached $326.45 billion, a 27.5% increase, with the number of accounts hitting a record 3.56 million, according to the DAF Research Collaborative’s 2025 annual report.
The rush was rational. Beginning January 1, 2026, the OBBBA restructured how high-income taxpayers deduct charitable contributions, rewarding front-loading and penalizing small, spread-out giving. For wealth managers and estate planning attorneys, this is not a background tax detail. It is an active planning lever with real dollar implications for HNW clients.
What Did the OBBBA Actually Change for Charitable Deductions?
The OBBBA’s changes to charitable giving are not symmetrical. They benefit some clients and penalize others, depending almost entirely on AGI and how they give.
Starting in 2026, itemizers can only deduct charitable contributions that exceed 0.5% of adjusted gross income. For a couple with $300,000 in AGI, the first $1,500 of charitable giving is non-deductible even if they itemize. For a $1 million AGI, the non-deductible floor is $5,000. For clients who give $10,000 to $15,000 annually and just barely clear the standard deduction threshold, the effective value of their gifts declined on January 1.
There is also a deduction cap for top-bracket taxpayers. Under prior law, donors in the 37% bracket received approximately $0.37 back for every dollar given. Under the OBBBA, the effective marginal value falls to roughly $0.35. On a $100,000 gift, that is a $2,000 difference in tax savings. Small in percentage terms, real in dollars.
On the other side, the OBBBA creates a new above-the-line deduction of up to $1,000 for single filers and $2,000 for married filing jointly, for cash gifts to public charities. This deduction is available to non-itemizers, a meaningful benefit for middle-income donors who previously could not deduct charitable gifts at all.
The catch: the above-the-line deduction explicitly excludes contributions to donor-advised funds and supporting organizations. A client who sends $2,000 to Fidelity Charitable cannot claim it above the line. A client who sends $2,000 directly to their local food bank can.
That single carve-out creates a planning fork that requires income-based segmentation across an advisor’s client book.
Why Does the OBBBA Create a Two-Tier Charitable Tax System?
The OBBBA’s architecture (a new above-the-line deduction for direct givers, but an AGI floor and cap for itemizers) produces different optimal strategies by income band.
For clients with AGI below roughly $150,000 who take the standard deduction, the new $1,000/$2,000 above-the-line deduction is the most tax-efficient giving path. There is no DAF advantage in this band; direct giving to public charities is better.
For clients with AGI above $500,000 who consistently itemize, the DAF bunching strategy is dramatically more valuable. A client giving $50,000 in a single year to a DAF, rather than $10,000 across five years, clears the standard deduction threshold with room to spare, captures the full $50,000 deduction in one tax year, and retains the flexibility to recommend grants to charities over the next five years. The DAF account can be invested in the interim, growing tax-free.
The $150,000–$500,000 band requires case-by-case analysis. Whether a client itemizes in a given year depends on mortgage interest, state and local taxes (now capped at $40,400 under the OBBBA’s SALT provision), and medical expenses. Advisors in this band should model the giving strategy alongside the SALT cap and mortgage deduction projections before recommending an approach.
For context on how the OBBBA’s SALT and estate tax changes interact with broader financial plans, our analysis of the $15 million estate tax exemption under OBBBA covers the core framework.
Why Appreciated Stock Is the Most Powerful DAF Contribution Today
The mechanics of contributing appreciated securities to a DAF have not changed, but their relative advantage over cash has grown under the OBBBA.
A client holding $100,000 in appreciated stock with a $20,000 cost basis has two options: sell the stock, pay $16,000 in long-term capital gains tax (at 24% effective rate), and donate the $84,000 net proceeds; or contribute the stock directly to a DAF, claim a $100,000 deduction (capped at 30% of AGI for appreciated securities), and pay zero capital gains.
The second path delivers $16,000 more to charity and eliminates the capital gains tax entirely. DAFgiving360 reported that 63% of contributions in fiscal year 2025 came in the form of non-cash assets (stocks, real estate, and private business interests), up from 58% in 2023.
For clients holding concentrated positions in appreciated employer stock or private business interests ahead of a liquidity event, a DAF contribution before the sale is one of the most tax-efficient moves in the wealth preservation toolkit. The contributed asset is sold inside the DAF free of capital gains, and the proceeds are available for charitable grants on the donor’s recommended timeline.
The Daffy platform crossed $1 billion in charitable assets in March 2026, just 4.5 years after launch, driven largely by simplified appreciated-asset contributions.
How Charitable Bunching Works in Practice After the OBBBA
Charitable bunching is the practice of consolidating multiple years of charitable giving into a single tax year, claiming a larger deduction in that year, and making no charitable gifts in the intervening years. A donor-advised fund is the standard vehicle because it separates the timing of the tax deduction (when assets are contributed to the DAF) from the timing of actual charitable grants (when the DAF sends money to charities).
Under the OBBBA, bunching has become more valuable because the 0.5% AGI floor and the SALT cap together reduce the frequency with which middle-to-upper-income clients can clear the standard deduction threshold annually. Bunching solves the problem by concentrating deductions into years when itemizing makes sense.
A worked example: a married couple with $400,000 AGI gives $15,000 annually to charity. In a non-bunching year, their itemized deductions ($15,000 charity, $10,000 SALT, $12,000 mortgage interest) total $37,000, just above the $30,000 standard deduction for MFJ. The marginal value of the charitable deduction is modest.
In a bunching year, they contribute three years of giving ($45,000) to a DAF at once. Their itemized deductions rise to $67,000. The $37,000 excess over the standard deduction is deducted at their marginal rate. The following two years, they take the standard deduction while the DAF recommends grants on their behalf. Net tax savings over three years: approximately $7,400 additional, on the same total charitable budget.
That $7,400 exceeds the 0.5% AGI floor penalty ($2,000 over three years at $400K AGI) by a factor of 3.7. Bunching more than compensates for the OBBBA’s new floor in this income band.
For estate planning clients who have already restructured after OBBBA, the DAF fits neatly alongside the strategies covered in our analysis of trust restructuring for the $3–$14 million estate tier.
What Advisors Should Watch in Q3 2026
Charitable giving data for the first half of 2026 will begin appearing in DAF sponsor reports starting in September. The critical metric to track is whether the pace of DAF contributions is accelerating or decelerating relative to the 2025 pre-OBBBA rush.
The Fidelity Charitable 2026 annual report, expected in early 2027, will be the first full-year dataset under the new rules. But the National Philanthropic Trust’s mid-year data and the DAF Research Collaborative’s interim reports will offer early signals on whether the 0.5% floor is dampening contributions in the $100,000–$250,000 AGI band or whether advisors are successfully redirecting clients toward appreciated-asset contributions and bunching.
Separately, the IRS is expected to issue formal guidance in late 2026 on the interaction between the new above-the-line deduction and the 0.5% AGI floor for clients who both itemize and have small direct charitable gifts. There is a technical ambiguity in the current statute on whether the above-the-line deduction reduces AGI for purposes of calculating the 0.5% floor. The answer has real dollar consequences for clients in the $150,000–$300,000 AGI range.
Three Questions Advisors Should Raise at the Next Client Meeting
- For clients who have been giving $10,000–$20,000 annually to charity: has your giving exceeded the new 0.5% AGI floor each year, and have we modeled whether bunching three to five years into a DAF contribution would produce a better tax outcome under your 2026 itemized deduction profile?
- For clients holding appreciated securities: have we identified positions where a direct contribution to a donor-advised fund before a sale or rebalance would eliminate capital gains tax while preserving the full charitable deduction, and does that move fit your charitable intentions for 2026 and 2027?
- For clients who previously gave directly to charities without a DAF: given that the new $2,000 above-the-line deduction for cash gifts does not apply to DAF contributions, does the math still favor opening a DAF, or is a hybrid approach (direct giving for the above-the-line portion, DAF for larger bunched contributions) the right structure for your income level?
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