Donor-Advised Funds - Smart Generosity

A great way to give more and keep more

Over the last few years of filing taxes, many people have noticed something frustrating: Even with thousands of dollars in charitable contributions, they're still taking the standard deduction. Generosity isn't translating into tax benefits the way it used to.

If this sounds like you, you're not alone. The 2017 tax reform nearly doubled the standard deduction - and it's even going higher: For 2026, the standard deduction rises again to $32,200 for married couples filing jointly. If you're 65 or older, new tax laws through 2028 increase that threshold even higher.

Enter the Donor-Advised Fund (or "DAF"). If you haven't yet explored this giving vehicle in relation to your charitable giving to the ACLJ, it's time to take a serious look.

The Bunching Strategy That Benefits You

Here's the elegant solution DAFs offer to the standard deduction problem: Instead of spreading your charitable giving across multiple years and losing the tax benefit entirely, you "bunch" several years of donations into a single year.

Let's say you typically give $15,000 annually to charity. Under normal circumstances with the current standard deduction of $29,200 for married couples, you'd take the standard deduction and receive no tax benefit from your generosity. But if you contribute $45,000 to a DAF in one year - three years' worth of giving - you've now exceeded the threshold. You can itemize, claim the full deduction, and receive additional tax savings.

The funds sit in your DAF account, and you recommend grants to your church or favorite charities on your original timeline: $15,000 this year, $15,000 next year, and $15,000 the year after. You've maintained your giving pattern while also recapturing the tax benefit you thought you'd lost.

Beyond Tax Strategy: The Practical Advantages

• First, there's administrative relief. With a DAF, you receive one consolidated tax document, simplifying your record-keeping and your tax return.
• Second, your contributions can grow. When you fund a DAF, those assets can be invested in various portfolios depending on your risk tolerance and timeline. The growth is tax-free, which could increase the amount of impact you can make with your donations.
• Third, you gain flexibility in what you contribute. While cash donations are straightforward, DAFs excel at accepting appreciated securities. If you have stock that's increased significantly in value, contributing it directly to your DAF allows you to avoid capital gains taxes entirely while claiming a deduction for the full fair market value, and then distributing the donation on your timeline.

The Critical Caveat

When you contribute to a DAF, you receive an immediate tax deduction, but those funds aren't yet working to protect faith and freedom.

This distinction matters more than you may realize. You may have received a charitable deduction, but your contribution is essentially parked until you recommend grants and put it to work.

If you treat your DAF like a long-term savings account, accumulating funds year after year, the tax benefits may be real, but the impact through the ACLJ's efforts remains unrealized.

It's most effective to use a DAF as a strategic distribution vehicle to make a difference for the causes you care about.

Looking Ahead: Building a Philanthropic Legacy

DAFs also offer advantages for long-term philanthropic planning. Many providers allow you to name successor advisors, creating a vehicle for multigenerational giving. You can involve adult children in grant decisions, sharing your values and the organizations you support. Some families even use their DAF as a foundation alternative.

You also maintain privacy options that aren't always available with direct giving. Grants can be made anonymously if you prefer, giving you control over your philanthropic profile.

How To Get Started

The ACLJ accepts contributions from a wide variety of Donor-Advised Funds, and many of our strategic members use this method to support our mission.

If you already maintain a DAF, recommending a grant is typically straightforward through your provider's online portal.

If you're considering establishing a DAF, most major financial institutions offer programs: Fidelity Charitable, Schwab Charitable, Vanguard Charitable, National Christian Foundation, The Signatry, and others. Community foundations also sponsor DAFs, often with lower account minimums and deeper local knowledge.

The setup process is generally simple, but we strongly encourage you to consult with your tax advisor or financial planner. Every individual's situation is unique, and professional guidance ensures a DAF aligns with your specific financial and charitable objectives.

The Bottom Line

The rising standard deduction doesn't have to disrupt the tax benefits for charitable giving.

Donor-Advised Funds offer a sophisticated solution that preserves tax advantages while adding flexibility, growth potential, and administrative simplicity. Put simply: smart giving.