It is the first week of December. A colleague mentions she opened a donor-advised fund, and the deduction was the reason. You have given to the same three causes for years, in amounts nobody ever set. The year-end tax question now has a deadline. The giving question never did.
Two decisions share one deadline
Giving involves two decisions that tend to arrive as one. The first is a tax-year question: in which year does a gift count? The second is a policy question: how much do you intend to give, to which causes, and over how many years?
December 31 governs the first. It has no authority over the second. A household that never set a policy can let the deadline set it by default. The amount becomes whatever year-end feels like, and the vehicle becomes whatever a colleague mentioned.
I wrote about a version of this problem in The Difference Between a Financial Goal and a Financial Plan. A list of intentions becomes a plan only when something forces a choice among them. A deadline is a poor substitute for that.
What changed for 2026
Two rules changed this year that bear on any December decision.
Starting in 2026, itemizers generally deduct charitable contributions only to the extent they exceed 0.5% of adjusted gross income. At an AGI of $400,000, the first $2,000 of giving falls under that floor. Non-itemizers now have a separate deduction of up to $1,000, or $2,000 for married couples filing jointly, for cash gifts to qualifying charities. Contributions to donor-advised funds do not qualify for that new deduction.
Bunching is a timing tool
Bunching means concentrating several years of giving into a single tax year. For a household whose other deductions sit near the standard deduction, concentrating charitable contributions can make itemizing more useful in the bunched year. The new 0.5% floor also affects the calculation, although amounts limited by the floor may carry forward, which makes the actual tax result more complicated than a one-year comparison suggests.
Bunching changes when a gift counts. How much a household intends to give is a separate decision, and whether bunching produces a tax benefit depends on income, other deductions, carryovers, and the type of contribution.
What a donor-advised fund settles, and what it leaves open
A donor-advised fund is one way to separate the deduction year from the years charities actually receive money. The IRS describes the structure this way: once the donor makes the contribution, the sponsoring organization has legal control of the assets. The donor keeps advisory privileges over grants and, depending on the sponsor, investments. The gift is made in the funding year, and recommendations about where it goes can follow over time.
That solves a timing problem. It leaves a policy problem standing, because the years between funding and granting are exactly where a household's intentions have to live.
A contribution generally has to be made within the tax year, and the date it counts depends on how it is sent. A mailed check counts when mailed and a card charge counts when charged, while the date for securities depends on how the transfer is delivered. Sponsors also set their own processing cutoffs, which may fall before December 31, so the working deadline can be earlier than the tax deadline.
Write the policy before choosing the vehicle
The sequence is giving policy first, tax timing second, vehicle third. The policy establishes the commitment. Tax circumstances can affect when it gets funded, and the timing of the grants a household has in mind helps decide whether a donor-advised fund or direct giving fits.
The way I see it, every account in a plan has a purpose, and the purpose decides how the money gets used. A date on the calendar can tell me when a gift would be deductible. It cannot tell me what the gift is for.
A household can work through four questions before December:
- How much do we intend to give over the next several years, as an amount or a range?
- Is the giving recurring to the same causes, or responsive to what comes up?
- What funds it? The asset used for a gift can change the tax result, which is worth raising with a tax professional.
- What happens to the number if income drops?
The number comes first
Write down the amount or range you intend to give over the next several years before working backward from December 31. The deadline will still be there.
Common questions
What is bunching, and who is it for?
Bunching concentrates several years of giving into one tax year so that itemized deductions exceed the standard deduction in that year. Whether it fits depends on a household's other deductions, income, and giving pattern. A tax professional can run the actual numbers.
Can I take back money I put in a donor-advised fund?
No. Once the gift is made, the sponsoring organization has legal control, and the donor holds advisory privileges only. Grant recommendations are advisory, so the sponsor is not bound to follow them.
Does the 0.5% floor apply to my regular giving?
For itemizers in 2026, it applies to charitable contributions generally, including regular gifts to the same causes. Because the floor is a share of AGI, it scales with income.
Do donor-advised fund gifts qualify for the new non-itemizer deduction?
No. Qualifying cash gifts to eligible charitable organizations can, but contributions to donor-advised funds cannot.
What if my income drops after I fund a multiyear gift?
The contribution is already irrevocable. A donor can generally make grant recommendations over time, subject to the sponsor's rules and approval, but a later change in income does not put the contributed assets back under the household's control. That is why the income question belongs in the policy stage, before funding.
If you're building wealth without an inherited playbook, a clear structure makes the next decision easier. It starts with a conversation.
D'Agaro Financial Advisory is a Registered Investment Adviser located in Virginia. Registration does not imply a certain level of skill or training. This content is for educational purposes only and is not tax, legal, or investment advice.