Unlock the full value of charitable contributions with one of the tax code’s most underused tools.
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Quick Tax Tip
With Art Werner
CPE Today
What if you could give more, support your favorite causes for years to come, and still walk away with a sizable tax deduction—all in one smart move?
That’s the opportunity donor-advised funds (DAFs) present, and the latest Quick Tax Tip brings clarity to a concept many donors and advisors overlook.
“A donor-advised fund, by itself, is a charity,” Werner explains. “But the contribution we make to it is deductible within IRS limits—and what’s really nice is you can lump your giving up front and spread it out over time.”For donors who no longer itemize due to the increased standard deduction post-TCJA, this opens the door to reclaiming lost tax benefits. Instead of giving $5,000 a year and missing out on deductions, you could contribute $50,000 in one year to a DAF—claim your deduction—then direct that money to charities over a decade.
Donor-advised funds allow people to align their finances with their values, Werner says. His example? Rescue dogs. A longtime supporter of animal rescue groups, he wants to donate to organizations that support that mission.
But rather than researching and writing checks to individual groups every year, he could simply tell the DAF, “Here’s $50,000. Please distribute this over time to vetted organizations that save dogs.” Not only does the fund do the legwork, but it also ensures the giving strategy lasts—even when life gets busy.
“It’s part of the client’s financial and estate planning,” Werner adds. “It’s not just a donation. It’s a plan.”
With over $230 billion in assets held in donor-advised funds across the U.S. and contributions reaching record highs, these charitable tools are becoming central to modern wealth management. Yet, too many advisors leave them out of the conversation.
“I love donor-advised funds,” Werner says. “I don’t believe they’re being used appropriately or often enough.”