As Giving Season fast approaches, advisers are gearing up for familiar conversations around philanthropy, taxes and year-end planning.
Many now include donor-advised funds (DAFs), one of the most flexible and tax-efficient charitable planning tools. DAFs allow donors to contribute assets, secure an immediate deduction, invest contributions tax-free and recommend grants over time.
Beyond their simplicity, DAFs offer advisers a powerful toolkit for navigating complex financial situations. They become especially valuable during periods of appreciated asset growth and as part of long-term wealth and estate planning.
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For advisers, Giving Season provides an ideal opportunity to surface these benefits and help clients approach generosity with intention and tax efficiency.
Below are three tax-smart strategies — plus several year-end considerations — that can help maximize both philanthropic impact and client financial outcomes.
1. Take tax deductions in the years when they matter most
A core benefit of a DAF is the ability to decouple when clients receive a tax deduction from when they ultimately choose the charities they want to support.
This is especially effective for individuals with fluctuating income — such as business owners, executives with equity compensation or anyone realizing a sizable gain from selling a home or business.
In high-income years, clients can "front-load" charitable contributions into a DAF and capture the full deduction immediately, even if they're not ready to commit to specific organizations.
For example, a client might contribute $100,000 in a high-income year but plan to grant only $20,000 right away.
A DAF lets them take the full deduction now, invest the remaining balance tax-free and take time to research charities that align with their values and giving philosophy.
This approach not only smooths charitable planning during complex financial years but also allows clients to make more intentional, well-researched granting decisions — without sacrificing the tax advantages of acting promptly.
2. Reduce capital gains exposure by donating appreciated assets
One of the most powerful ways clients can support charitable causes — and improve tax efficiency — is by donating long-term appreciated assets instead of cash.
By contributing long-term appreciated assets, clients capture the full appreciated value without triggering capital gains and can deduct the asset's fair market value, boosting the overall tax benefit.
Charities often lack the infrastructure to process complex asset gifts efficiently. DAFs, however, are designed to handle appreciated securities and even illiquid assets such as private company stock, cryptocurrency or real estate.
That means advisers can help clients unlock tax savings while giving nonprofits the ultimate benefit of a simple cash grant.
For clients with sizable estates or multigenerational legacy goals, DAFs can also help manage estate tax exposure. Assets contributed to a DAF are removed from the donor's taxable estate, offering a philanthropic tool that doubles as a long-term planning mechanism.
3. Use 'bunching' to maximize deductions under higher standard deduction thresholds
With today's higher standard deduction thresholds, many taxpayers no longer itemize annually. DAFs create an effective workaround through "bunching" — consolidating multiple years of charitable contributions into a single year.
For example, a client might contribute two or three years' worth of donations to their DAF in one tax year, itemize that year to capture a larger deduction and then take the standard deduction in subsequent years while continuing to make grants from the DAF.
For clients on the cusp of itemizing, this approach can generate meaningful tax savings without altering their charitable goals.
Here are some additional year-end DAF strategies advisers should consider:
Align giving with strategic goals, not just year-end deadlines. DAFs also give clients flexibility, whether through recurring grants, setting aside capital for future needs or aligning giving with long-term goals.
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Match contributions to income volatility. For clients with highly variable earnings, DAF contributions can be "dialed up" in high-income years and "dialed down" during leaner ones, smoothing tax exposure while allowing giving to remain consistent.
Incorporate legacy planning. Encouraging clients to discuss the charitable legacy they hope to leave — whether through successor advisers on a DAF or by making the DAF a beneficiary in their estate plan — can deepen relationships and strengthen multigenerational planning conversations.
The bottom line for advisers this Giving Season
As philanthropy becomes a more integral part of wealth planning, advisers have a meaningful opportunity to expand the conversation beyond generosity alone.
One of the often-underappreciated advantages of a DAF is that advisers can continue managing the assets contributed to the account, investing them for potential tax-free growth while maintaining their advisory role. This strengthens the client relationship and ensures charitable dollars can grow before being granted.
Combined with the tax efficiency, flexibility and long-term planning benefits DAFs already provide, this investment management capability positions them as a powerful tool — especially during Giving Season, when clients are looking to make an impact and optimize their year-end financial strategy.
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