Rule Changes May Boost Popularity of Donor-Advised Funds
Recent changes under the One Big Beautiful Bill Act have altered how charitable deductions work, prompting increased interest in donor-advised funds (DAFs) as a strategic giving vehicle. The new rules require itemizers to deduct contributions exceeding 0.5% of their adjusted gross income, making smaller annual gifts less tax-efficient and encouraging donors to consolidate multiple years' worth into one large contribution for maximum benefit. Advisors are increasingly turning to DAFs due to their flexibility—allowing clients to transfer assets without immediate charitable distribution—which has contributed to the growth of DAF assets surpassing $328 billion. Experts emphasize that advisors must understand both the benefits and legal nuances surrounding these funds, including irrevocable contributions and restrictions on receiving tangible returns. To support financial professionals in navigating this evolving landscape, institutions like the American College are launching specialized certifications focused on philanthropy and DAFs to enhance advisor competency.
Topics: charitable giving donor-advised funds (DAFs) One Big Beautiful Bill Act tax policy changes