The end of 2025 triggered an intense wave of charitable planning as high earners sought to maximize deductions before the 0.5% AGI “floor” and 35% “cap” took effect on January 1, 2026. Donor-advised funds (DAFs) played a major role, allowing clients to contribute assets in 2025 for optimal tax results, then recommend grants in future years.
Now that the new rules are in place, should you still recommend donor-advised funds at the community foundation?
Yes—DAFs remain highly relevant. Although the new deduction limits may reduce the marginal tax benefit for some donors, nothing has changed about the strategic advantages DAFs offer. Key reasons include:
- Clients give because of values, not just tax benefits. No one donates $1 simply to save $0.35. DAFs help clients express their legacy, organize their giving, and support causes they care about.
- Timing flexibility. DAFs still allow donors to separate the deduction year from the grantmaking year—critical during liquidity events, income spikes, or transition periods.
- Community Foundation advantages. A DAF at the Community Foundation provides local expertise, knowledge of regional nonprofits, and curated opportunities for meaningful, community-informed philanthropy.
- Advisor-friendly structure. Advisors appreciate the administrative simplicity, service quality, and opportunities for multi-generational engagement that a community foundation DAF provides.
Bottom line: DAFs remain a powerful philanthropic planning tool—integrating easily with estate plans, smoothing giving over time, and supporting values-based, community-minded philanthropy. The Community Foundation continues to be a trusted partner to help you deliver those benefits.