Key Takeaways
- To start, big changes are coming in 2026 from the One Big Beautiful Bill Act that may limit tax deductions, making 2025 crucial for tax-efficient charitable planning.
- Additionally, a donor-advised fund (DAF) provides immediate tax deductions and investment growth for contributed assets—perfect for those seeking tax-efficient strategies in San Diego and beyond.
- Moreover, if you itemize, consider the ‘bunching’ strategy in 2025 to maximize charitable deductions before the new rules kick in.
- DAFs simplify charitable giving, offering more flexibility in choosing charities and managing contributions.
- Contributions can include cash, stocks, real estate, and even cryptocurrency, to name a few.
2025 is the year to consider maximizing charitable giving due to changes coming from the One Big Beautiful Bill Act (OBBBA). At Pathview Wealth Advisors, we specialize in wealth management with a tax-centric planning approach. We help families make the most of this unique opportunity.
Above all, here’s what you need to know and how to make the most of charitable giving in 2025.
What Is a Donor-Advised Fund (DAF)?
To review, a DAF is a charitable giving vehicle that allows you to receive an immediate tax deduction for assets you contribute. These assets include, but are not limited to, appreciated stocks, cash, or other complex assets. Contributions to a DAF are irrevocable. Once inside, assets can be liquidated and invested until you decide where to donate.
In other words, think of a DAF as a charitable savings account where you receive:
- An Immediate tax deduction when you contribute.
- Investment growth potential while funds remain in the account.
Key Tax Benefits of DAF Charitable Giving
DAFs offer two major advantages for charitable giving:
- Specifically, cash contributions.
Simple and straightforward—cash donations receive an immediate tax deduction in the year in which you contribute. - In addition, you can choose to contribute appreciated stock.
This tax-smart approach eliminates capital gains on appreciated shares. This strategy also gives you a deduction for the full fair market value of the stock on the date of contribution. This two-fold benefit makes DAFs one of the most tax-efficient charitable giving strategies.
Why 2025 Is Critical: The “Bunching” Charitable Giving Strategy
We believe 2025 is critical for considering the “bunching” charitable giving strategy because starting in 2026, the deduction floor rises to 0.5% of AGI for those who itemize; this reduces the amount donors can deduct going forward. To maximize your benefits, consider the “bunching” strategy—grouping several years’ donations into one year (2025), fostering strategic charitable giving for years to come. This again, is only applicable to individuals who itemize.
To illustrate, let’s say your adjusted gross income (AGI) is $200,000 and you itemize. For simplicity, we will assume this will be the same AGI in 2026. If you contribute $10,000 to a DAF in 2026, the first $1,000 will no longer be deductible. This is because if you take your 2026 AGI of $200,000 and you multiply it by 0.5%, which is the new floor starting in 2026, that results in $1,000 of lost deductions. Now, let’s say you contribute $10,000 to a DAF in 2025. Your full donation could be deducted this year because the new tax rules go into effect next year.
In order to avoid losing a part of your tax deduction starting in 2026, the “bunching” strategy suggests that you combine future donations into one year. Since you can still deduct the full amount this year (2025), you would receive the full deduction now and plan to give to organizations at your leisure on a future date. It is important to note that this strategy would need to be reevaluated on an ongoing basis since tax laws change often.
If you do not know the right amount to “bunch,” our team at Pathview Wealth Advisors can help calculate the optimal amount for your specific situation.
DAFs vs Giving Directly to Charities
On the other hand, giving appreciated stock directly to charities can be complex. However, DAFs simplify this process, especially for those planning their charitable giving in 2025. Local providers like Jewish Community Foundation of San Diego or San Diego Foundation handle complex assets and offer a concierge approach to charitable giving. DAFs also provide flexibility to decide which charities to support. There is no timeline for giving after a DAF has been funded. One last thing to note is that contributions to DAFs continue to grow while you plan your giving at a later date if you do not know which organizations to support right now.
Family Involvement and Legacy Charitable Giving Planning
Beyond that, DAFs allow you to involve future generations into grant decisions. Additionally, our family-focused team ensures your charitable impact continues for generations, aligning with your values and legacy goals. We do this by partnering with foundations that offer Legacy Plans, which outline:
- Causes you want to support
- Donation instructions
- Giving frequency
This ensures your charitable impact in your community continues for generations, enhancing charitable giving beyond 2025.
What Can You Contribute to a DAF?
For example, common assets you can contribute to a DAF are:
- Cash
- Securities (stocks)
In addition, non-conventional donations to a DAF include:
- Real estate
- Vehicles
- Cryptocurrency
- Business interests
- Privately held stock
Bottom Line
2025 is a favorable tax year to consider using the bunching strategy to maximize charitable deductions before new rules take effect in 2026. At Pathview Wealth Advisors, we combine tax-centric planning with a San Diego wealth management perspective to help you achieve your charitable goals. DAFs provide flexibility, tax efficiency, and the potential for growth while you plan your charitable impact. Ready to see how much you could save with charitable giving? Contact us today.
Our team at Pathview Wealth Advisors specializes in charitable tax planning. We’ll help you determine the right amount and which assets to contribute.
Disclaimer
Please note, this content is for general informational purposes only and should not be considered tax or legal advice. Individual circumstances vary. Consult a qualified tax advisor before making any charitable giving decisions.
Pathview Wealth Advisors believes 2025 is the best year to take advantage of charitable giving due to new deduction limits that take effect under the One Big Beautiful Bill Act (OBBBA). Starting in 2026, the deduction floor will rise to 0.5% of your Adjusted Gross Income (AGI), meaning a portion of your donations will no longer be deductible. As a firm rooted in San Diego and committed to tax-centric planning, we recommend considering strategies like “bunching”—grouping several years’ donations into 2025—to lock in maximum charitable tax benefits.
A Donor-Advised Fund (DAF) is a charitable giving account that allows you to make contributions—such as cash or appreciated stock—and receive an immediate tax deduction. The assets inside a DAF grow until you decide which charities to support. At Pathview Wealth Advisors, we recommend considering a DAF as part of a tax-centric planning strategy because it simplifies giving, helps avoid capital gains taxes on appreciated assets, and provides flexibility for future donations. This approach supports San Diego based tax-efficient planning for families who want to manage charitable contributions effectively.
You can contribute several types of assets to a Donor-Advised Fund (DAF). Common gifts include cash and publicly traded securities such as stocks. DAFs also accept complex assets like real estate, vehicles, cryptocurrency, business interests, and privately held stock. At Pathview Wealth Advisors, we incorporate these options into tax-centric planning strategies to support tax-efficient charitable giving for families.