Smart Charitable Giving Through A Donor Advised Fund

Supporting nonprofits through a Donor Advised Fund allows you to bunch your charitable contributions so that you could achieve higher tax deductions.

Couple making $100,000;
Standard deduction for joint filers $24,000

Icon of 2 people

Charitable Contributions $10,000
Mortgage Interest $5,000
Real Estate Taxes $3,000
State And Local Taxes (SALT) $5,000
Total Deductible Expenses: $23,000

No Donor Advised Fund, No Bunching

If the couple makes $40,000 worth of charitable contributions over four years without bunching their support through a Donor Advised Fund at The Philadelphia Foundation, here's what will occur:

Charitable Giving - No Bunching chart

Total charitable contributions over four years:
$40,000

TOTAL DEDUCTIONS OVER FOUR YEARS:
$24,000 x 4 = $96,000

Donor Advised Fund and Bunching

By setting up a Donor Advised Fund at The Philadelphia Foundation and doubling-up on tax-deductible contributions in alternating years to achieve the larger itemized deduction in those years, the couple could achieve an extra $18,000 worth of deductions over four years:

  1. Establish a Donor Advised Fund at The Philadelphia Foundation to make grants to nonprofits every year.
  2. Double-up on tax-deductible contributions in alternating years to achieve the larger itemized deduction in those years.

Charitable Giving with Bunching Chart

$20,000 contribution to a Donor Advised Fund at The Philadelphia Foundation every other year.

Standard deduction in first and third year:
$24,000 x 2 = $48,000

Itemized deductions in second and fourth years:
$33,000 x 2 = $66,000

Total charitable contributions over four years:
$40,000

TOTAL DEDUCTIONS OVER FOUR YEARS:
$114,000

Contributions to a Donor Advised Fund at The Philadelphia Foundation — a 501(c)(3) publicly supported community foundation — are tax-deductible. Consult with a tax advisor for additional information.


Download this information as a pdf: Tax Reform DAF Advantages (PDF)


Schedule a confidential conversation about tax savings for charitable purposes.
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