Donor Advised Funds

Published: January 1, 2026

Each year, we highlight the benefits of Donor Advised Funds (DAFs) to help our clients maximize their charitable giving. With the One Big Beautiful Bill Act (OBBBA) now in effect, it’s more important than ever to revisit DAF strategies and understand how they fit into today’s tax landscape.

Key Benefits of a Donor-Advised Fund

I believe DAFs are a great tool for continuing to give to charity while receiving a deduction. As a refresher: a DAF is an account set up by making an irrevocable donation to an account solely for the purpose of making charitable donations both now and in the future.

If properly funded, a DAF can benefit a donor in a few key ways:

They get a tax deduction for the year the funds were donated to a DAF whether it is cash, appreciated securities, or other eligible assets, as long as their deductions are high enough to allow them to file Schedule A, Itemized Deductions.
They may be able to avoid capital gains tax by donating appreciated securities.

For example, if a person bought 100 shares of a stock or mutual fund at $100 a share, and it has increased to $300 a share – by donating these shares they receive a tax deduction in the year the donation was made of $30,000 (the appreciated amount), and they avoid the capital gains tax of $20,000.

Using the example above, the $30,000 can be invested, and has a chance to grow over time enabling a ;large donation.

Going forward, the client now has a $30,000 pool of money to make donations (potentially anonymously, if they so choose) until the money runs out.

Navigating the New Deduction Rules

Donor-Advised Funds (DAFs) remain a popular choice for donors who want flexibility and long-term planning. Under the 2026 tax law, charitable deductions—including those for DAF contributions—are subject to two key limitations

You must itemize deductions to claim any charitable contribution. If you take the standard deduction, DAF contributions are not deductible.
A 0.5% AGI floor now applies. This means only the portion of your charitable giving that exceeds 0.5% of your adjusted gross income (AGI) is deductible.

It is important to note that when a donation (in DAF parlance, a grant) is made from a DAF, it does not give the account holder an additional deduction. The tax deduction is taken at inception, or with subsequent contributions to a DAF only.

Choosing a DAF Provider and Understanding Eligible Charities

Many custodians such as Vanguard, Fidelity, and Charles Schwab offer dedicated platforms for managing DAFs. There are also community-based options like the Jewish Communal Fund and other public charities.

When selecting a provider, be sure to review:

Annual fees and investment options
Minimums for opening and contributing to the fund
Minimum grant amounts (some start at $250, which may not suit smaller donations)

Eligible public charities include the wide range of charitable organizations such as:

Hospitals and medical research institutions
Religious organizations and places of worship
Environmental and educational nonprofits
Museums, arts organizations, and other 501(c)(3) entities formed for charitable purposes

Charitable giving remains one of the most powerful ways to make a lasting impact, both in your community and in your financial plan. While upcoming tax law changes may introduce new hurdles, strategic tools like Donor-Advised Funds still offer meaningful opportunities to give with purpose and efficiency.

If you’re considering a DAF or want to explore how to maximize your deductions under the current rules, we encourage you to reach out. We’re here to help you navigate the new landscape and tailor a giving strategy that aligns with your goals. Please do not hesitate to call us.

Follow us on social:

Talk to an experienced financial planner

By sending this message, you agree that Modera will use the personal information you disclose to have an adviser contact you and/or you agree to opt-in to receive marketing communications from us. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. You can reply STOP to opt-out of further messaging.

Modera Wealth Management, LLC (Modera) is an SEC-registered investment adviser. SEC registration does not imply any level of skill or training. For information pertaining to our registration status, the fees we charge including how we are compensated and by whom, additional costs that may be incurred, our conflicts of interest, any disclosed disciplinary events of the Firm or its personnel, and the types of services we offer, please contact us directly or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov) to obtain a copy of our disclosure statement, Form ADV Part 2A, and ADV Part 3/Form CRS. In addition, our Privacy Notice outlines how we handle your non-public personal information. Please read these documents carefully before you make a decision to hire Modera, invest or send money.

This material is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This material is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this material are relevant as of the date of publication and are subject to change without notice based on changes in the law and other conditions.

Investing in the markets involves gains and losses and may not be suitable for all investors. Information herein is subject to change without notice and should not be considered a solicitation to buy or sell any security or to engage in a particular investment or financial planning strategy. Individual client asset allocations and investment strategies differ based on varying degrees of diversification and other factors. Diversification does not guarantee a profit or guarantee against a loss.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.