Charitable Giving Using A Donor-Advised Fund

We believe it is important to make this a better world, and one of the most meaningful ways to do that is through charitable giving. We encourage and applaud our clients who do the same. Choosing the right charities is one part of a thoughtful giving strategy. Choosing the right method for making those donations is equally important.

Many of our clients give generously year after year. They support churches, schools, hospitals, community organizations, and causes that reflect their values. But even thoughtful giving can become scattered over time: multiple checks, multiple receipts, appreciated stock decisions, tax timing questions, and uncertainty around which giving strategy fits best.

A donor-advised fund, or DAF, can help bring more structure, flexibility, and tax efficiency to that process. This month, we’re excited to share how a DAF can make your giving both more flexible and more tax efficient.

In this blog, we will discuss

• What is a Donor-Advised Fund 
• When a DAF May Make Sense
• Selecting a DAF Provider
• Accessing the Fidelity Charitable® Website
• Naming Your DAF
• Bunching
• Donor-Advised Fund vs Qualified Charitable Distribution (QCD)
• Giving as a Part of Your Financial Journey

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What is a Donor-Advised Fund?

On May 1, 2026, we held a webinar featuring Christine Lim-Beasley, Vice President and Charitable Planning Consultant at Fidelity Charitable®. Christine shared a wealth of information about DAFs and the Fidelity Charitable® platform. Here’s what you need to know.

There are three steps for charitable giving using a DAF.

First, an individual makes a tax-deductible donation to the DAF. The tax deduction is captured in the year the contribution is made, not when the money is eventually distributed to charity. Second, the money inside the DAF can be invested across a range of options, from conservative to more growth oriented. Third, the DAF donor can recommend grants to eligible 501(c)(3) public charities, either as a one-time gift or through recurring monthly grants. While there is no set time limit for how long funds can remain in the DAF before being directed to a charity, most donors find a rhythm of giving within the first year and continue annually from there.

One of the most practical advantages of a DAF is how it simplifies tax recordkeeping. The tax-deductible transaction is the contribution to the DAF itself, not the subsequent distributions to individual charities. For tax purposes, you simply track your contributions to the DAF. You don’t need to document the amounts or timing of each grant made from the DAF to your chosen organizations. For anyone who gives to multiple charities throughout the year, this simplification alone can be a significant benefit.

When a Donor-Advised Fund Makes Sense

A DAF may be worth considering if you:

• Give to multiple charities throughout the year
• Own highly appreciated stock or other non-cash assets
• Want to bunch several years of charitable giving into one tax year
• Had an unusually high income year
• Want to involve family members in charitable planning
• Want a simpler way to organize giving and charitable records

A DAF is not the right fit for every donor, but for the right situation, it can make charitable giving more organized, flexible, and tax efficient.

Selecting a Donor-Advised Fund Provider

DAFs are available through many large financial institutions. We work with Fidelity Charitable®, the largest DAF provider in the world. Here are some highlights from their 2025 data, as reported in their 2026 Giving Report:

• in 2025, donors with Fidelity Charitable® accounts distributed $18.3 billion to charities, a 23% increase year-over-year
• Roughly 395,000 donors
• Grants directed to 226,823 unique nonprofit organizations
• 69% of contributions to Fidelity Charitable® were in the form of non-cash assets such as stocks

Accessing the Fidelity Charitable® Website 

You can access the Fidelity Charitable® website at FidelityCharitable.org.

If you already have a login for Fidelity.com, you can use the same username and password. You can also navigate directly from your Fidelity.com account: scroll to the bottom of your accounts list along the left side of the screen, select the name of your DAF, and it will take you straight into the Fidelity Charitable® website without requiring a separate login.

Naming Your Donor-Advised Fund 

When you open a new DAF, you get to choose its name. This turns out to be a more personal decision than it might seem. Some clients go the traditional route, something like “The Smith Family Giving Fund.” Others take a more creative or even lighthearted approach. There’s no wrong answer. The name can reflect your family’s values, your sense of humor, or simply what feels right. Let your imagination guide you.

Bunching 

“Bunching” is a tax strategy where a donor consolidates multiple years of planned donations into a single tax year. The goal is to push total itemized deductions above the standard deduction threshold in that year, allowing the donor to benefit from itemizing. In alternate years, the donor gives little or nothing from their personal funds and simply takes the standard deduction. This approach can improve the overall tax efficiency of charitable giving without changing the total amount given over time.

Bunching also makes sense when someone has an unusually high-income year. In that case, pulling forward several years of planned giving into the current year can meaningfully reduce taxable income.

Here’s a straightforward example: imagine you plan to give $10,000 per year for 10 years. Rather than spreading those gifts out, bunching means contributing the full $100,000 to your DAF at the start, capturing the deduction in one year, subject to IRS limits, and then directing grants to your chosen charities over time on your own schedule.

Donor-Advised Fund vs Qualified Charitable Distribution (QCD)

Another widely used charitable giving strategy is the QCD. QCDs are only available to individuals age 70½ or older and are most commonly used to send money directly from an IRA to a charity. This approach can satisfy a Required Minimum Distribution (RMD) while allowing the IRA owner to exclude the donated amount from their taxable income entirely. In other words, the full amount goes to charity with no taxes owed.

The logical next question: “Can I send IRA money directly to a DAF?” The answer is “no.” If your goal is to donate IRA assets to charity without triggering taxes, a QCD is the right tool. A DAF, on the other hand, is particularly well suited for donating highly appreciated stock from a non-retirement account. When you contribute appreciated stock to a DAF, you may avoid paying capital gains tax on the appreciation and may be eligible for a charitable deduction, subject to applicable tax rules and deduction limits.

The right charitable giving strategy often depends on where the money is coming from. If the assets are coming from an IRA, a QCD may be useful for eligible donors age 70½ or older. If the assets are highly appreciated stock in a taxable account, a DAF may be a better fit. If the donor wants to bunch several years of cash giving into one tax year, a DAF may also be worth considering. And for families who want to create more structure around long-term giving or charitable legacy, a DAF can be a helpful planning tool.

Both strategies are effective, and many of our clients use them together depending on the source of their assets and their income picture in a given year. The table below highlights the key differences to help you think through which approach might be right for you.

Giving as a Part of Your Financial Journey

Charitable giving is not just a tax strategy. For many families, it is a way to express gratitude, pass values to the next generation, support organizations that shaped their lives, and make a lasting impact in their communities.

A donor-advised fund is simply a tool. The deeper question is: what do you want your giving to accomplish? When charitable planning is coordinated with your broader financial plan, your generosity can become more intentional, more organized, and potentially more impactful.

Donor-Advised Funds are a flexible, tax-efficient way to give, and they work especially well when paired with thoughtful planning. If you’re wondering whether a DAF makes sense for your situation, or if you’re curious how it compares to a QCD for your specific circumstances, we encourage you to reach out to your Wealth Manager. We’re happy to help you think it through.

If you are a client of FJP and have questions about the U.S. economy, the U.S. stock market, or your portfolio, contact your Wealth Manager, Elaine Manley, Scott Manley, Linda Tjiputra,  we love hearing from you and are happy to talk.

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