Charitable Bunching: Why Contribute Several Years of Gifts at Once?
Bunching concentrates deductions into selected years while a donor-advised fund can spread the actual charitable grants over time.
Why bunch deductions
When annual itemized deductions are near the standard deduction, concentrating multiple years of charitable giving into one year can increase the value of itemizing under current law.
DAF role
A donor can contribute a larger amount to a donor-advised fund in one year and recommend grants to operating charities over later years.
Appreciated assets
Contributing qualifying appreciated assets can sometimes avoid recognizing embedded capital gain while supporting a charitable deduction, subject to current rules.
Control distinction
The donor retains advisory privileges but the sponsoring charity legally owns the contributed assets.
The takeaway
The tax deduction generally occurs when the irrevocable contribution is made to the sponsoring charity, not when the donor later recommends grants from the DAF.
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FAQ
Does the donor generally deduct the later DAF grant date?
No. The contribution to the sponsoring charity is the relevant gift event.
Can a DAF help separate deduction timing from grant timing?
Yes.
Can appreciated property be useful in charitable planning?
Yes.