Donor-Advised Funds for Charitable Tax Deductions
By: Jim McGowan, CFP®
It’s that time of year again when everyone starts scrambling for year-end tax strategies. One tool more families are starting to use? The Donor-Advised Fund.
At first glance, it might sound complicated. But this strategy can be a smart, straightforward way to make your charitable giving actually count when it comes to your tax deductions.
The Tax Problem You Might Not Realize You Have
Here’s a scenario I see all the time:
- $10,000 in mortgage interest
- $7,000 in state income taxes
- $7,000 in real estate taxes
- $7,000 in charitable contributions
That adds up to $32,000 in itemized deductions. Sounds great, right?
Not quite. For 2025, the standard deduction for a married couple is $32,600. That means your generous $7,000 donation to your church or favorite charity? It gave you zero tax benefit.
Enter the Donor-Advised Fund
A Donor-Advised Charitable account allows you to bundle several years’ worth of charitable donations into one tax year, which can push your total deductions over the standard threshold.
You get the full tax deduction this year, and still control how and when the money is given to the charities you care about over time. It’s a win-win for tax planning and your long-term giving strategy.
It’s Not as Hard as It Sounds
This isn’t a niche strategy for ultra-wealthy families, it’s something many households can take advantage of, especially those who give consistently year after year.
If you haven’t heard of Donor-Advised Funds, that’s completely normal. But the truth is, most people don’t want to become tax experts and that’s why they hire someone to help.
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