What's Happening?
Charitable giving to donor-advised funds (DAFs) surged in 2025, driven by strong stock market returns and impending tax reforms. DAFgiving360, a major administrator of DAFs, reported a record $9.9 billion in grants to charities, marking a 28% increase from the previous year. Donors can contribute cash or assets to DAFs and receive an immediate tax deduction, allowing them to decide later how to distribute their gifts. The rise in contributions was partly due to tax advisors encouraging wealthy clients to make large donations to DAFs before the expiration of tax breaks under President Trump's One Big Beautiful Bill Act.
Why It's Important?
The increase in contributions to donor-advised funds reflects a strategic response by donors to maximize tax benefits amid changing
tax laws. By contributing appreciated assets like stocks to DAFs, donors can avoid capital gains taxes while supporting charitable causes. This trend highlights the intersection of financial planning and philanthropy, as donors seek to leverage tax advantages to enhance their charitable impact. The surge in DAF contributions also underscores the role of financial markets in influencing charitable giving patterns, as strong market performance can lead to increased philanthropic activity.
