For many Christian families, December is a season of giving. It is also when the tax rules around giving get the most attention.
A donor-advised fund, or DAF, is one tool some givers use. Here is how it works, where it may help, and where it does not.
A DAF is an account held by a sponsoring public charity. You contribute cash or other assets, and if you itemize, you may be able to deduct the gift in the year you make it. Later, you recommend grants from the fund to churches, ministries, and other qualified charities, on your timeline.
Two details matter. The sponsoring organization has legal control of the money once it is given, so your grant choices are recommendations. And for the deduction, you need a written acknowledgment from the sponsor saying it has exclusive legal control over the assets. (Sources: IRS, https://www.irs.gov/charities-non-profits/charitable-organizations/donor-advised-funds; IRS Publication 526, https://www.irs.gov/publications/p526)
For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. (Source: IRS Rev. Proc. 2025-32, https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) Many generous households give faithfully but never itemize, so their gifts bring no itemized deduction.
Here is a hypothetical example, not based on any real family. A couple gives $12,000 a year and has $15,000 of other itemized deductions. Together that is $27,000, below the standard deduction. If instead they contribute $36,000, three years of giving, to a DAF in 2026, their itemized deductions could be about $51,000 that year, before the new floor described below. In 2027 and 2028 they take the standard deduction and recommend grants to their church from the fund.
Their church still receives the gifts. The timing of the deduction changes.
Instead of cash, some givers contribute long-term appreciated investments. In general, the deduction is based on fair market value, and the gain is not taxed to you. Deductions for this kind of gift to a public charity are generally limited to 30% of adjusted gross income, compared with 60% for cash, and unused amounts can carry forward for up to five years. (Source: IRS Publication 526)
If you are 70 and a half or older, a qualified charitable distribution from an IRA may be a simpler path. A QCD goes directly from your IRA to a charity, up to $111,000 in 2026, is generally excluded from income, and can count toward your RMD, whether or not you itemize. (Source: IRS Notice 2025-67, https://www.irs.gov/pub/irs-drop/n-25-67.pdf) But a QCD cannot go to a donor-advised fund. (Source: 26 U.S.C. 408(d)(8)(B), https://www.law.cornell.edu/uscode/text/26/408)
Gifts generally must be completed by December 31 to count for 2026. Transfers of investments can take several business days, so start early and keep every receipt.
"Do not withhold good from those to whom it is due, when it is in your power to do it" (Proverbs 3:27, ESV). A DAF can be a helpful tool. The goal is gifts that reach the church and the mission field, not a balance that sits idle. "God loves a cheerful giver" (2 Corinthians 9:7, ESV).
To see how year-end giving fits your retirement income plan, take the free Retirement Paycheck Readiness Scorecard at scorecard.matt25capital.com, or call our office at 620-670-9455.
I'm Will Snodgrass, CFP®, with Matt25 Capital, serving Christian pre-retirees and retirees from our office in The Woodlands, Texas, and by video with clients nationwide. Advisory services are available only where Will is properly registered or exempt from registration.
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Schedule a ConsultationThe opinions voiced in this material are for general information and educational purposes only and are not intended to provide specific advice or recommendations for any individual. Nothing in this blog constitutes investment, legal, or tax advice. Please consult with a qualified professional before making any financial decisions. Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal. Any hypothetical examples used are for illustrative purposes only and do not represent actual client results. Confirm current IRS, Social Security Administration, and plan rules for your situation. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®. Certified Financial Planner Board of Standards Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements. Matt25 Capital is a separate entity from Commonwealth Financial Network®.
This material does not constitute tax or legal advice. Contributions to a donor-advised fund are irrevocable, the sponsoring organization has legal control over contributed assets, and grant recommendations are advisory. Deduction limits and other rules depend on individual circumstances and are subject to change. No specific donor-advised fund sponsor is recommended.