For many attorneys, CPAs, and financial advisors, the last weeks of summer mark the beginning of year-end planning season. As clients return from vacations and turn their attention to tax and financial planning, it's an ideal time to revisit charitable giving strategies that could be important to help clients achieve their 2026 planning objectives. 

A popular strategy that deserves special attention in year-end planning is "bunching" charitable contributions.  

The One Big Beautiful Bill Act added a new limitation under Internal Revenue Code Section 170 requiring that itemized charitable deductions must generally exceed 0.5% of adjusted gross income before a deduction is available. In addition, Section 68 now effectively limits the tax benefit of itemized deductions for taxpayers in the highest marginal income tax bracket to 35%. These two new provisions are sometimes called the “floor” and the “cap.” Although in many cases charitable giving remains highly tax-efficient, these changes make proactive planning increasingly important. 

So, what is “bunching”? And why is it so useful under current tax law? Here’s how it works: 

• Rather than making charitable gifts in roughly equal amounts each year, a client may benefit from consolidating two or more years of planned charitable contributions up front into a single tax year.  
• By concentrating, or “bunching,” donations into one year, the client may be better positioned to itemize deductions in that year while claiming the standard deduction in subsequent years, potentially producing greater cumulative tax savings over time. 

A Donor Advised Fund at BTCF can serve as an effective vehicle for implementing a bunching strategy. That’s because a single, larger contribution to the DAF, can generally be claimed as a charitable deduction in the year of the contribution under Internal Revenue Code Section 170(a), and then grants can be recommended to nonprofit organizations now and in future years. In short, the timing of the income tax deduction is separated from the timing of charitable distributions, allowing the nonprofits to continue receiving consistent annual support. 

As year-end approaches, many clients will naturally ask whether they should “bunch,” or accelerate, charitable gifts before December 31. Advisors who raise the bunching conversation now—and coordinate early with BTCF—can help clients evaluate whether this strategy aligns with both their philanthropic objectives and their broader financial plans and then implement the strategy without rushing through it. 

Contact our Philanthropic Services team to learn more about Donor Advised Funds or to discuss charitable giving strategies!

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