Wealthy Donors Rushed to Lock In Tax Breaks – and Donor-Advised Funds Cashed In

The original story by Hayley Cuccinello for CNBC.

Charitable giving got a big jolt in 2025 – and a lot of it flowed through donor-advised funds, or DAFs, as wealthy donors raced to beat the clock on expiring tax breaks and take advantage of a red-hot stock market.

DAFgiving360, one of the country’s largest DAF administrators, said donors granted a record $9.9 billion to charities last year. That’s up $2.2 billion, or 28%, from 2024 – the biggest annual jump the group has ever reported.

The surge came as tax advisors urged high-income clients to move fast after President Donald Trump signed the One Big Beautiful Bill Act, which trimmed several tax advantages for wealthy donors starting in 2026. The advice was simple: fund your DAF now, lock in the deduction, and figure out the charitable payouts later.

That’s exactly what many donors did.

DAFs allow people to take an immediate tax deduction when they contribute cash or assets, even if the money doesn’t reach a charity for years. They’re also especially attractive for people sitting on big gains in stocks or other assets, since donors can contribute appreciated investments without triggering capital gains taxes.

According to DAFgiving360, 74% of contributions in 2025 came from non-cash assets, including stocks, ETFs, index funds, real estate and even cryptocurrency – a record share.

“If you have appreciated assets or things that are hard to liquidate, DAFs really shine,” said Julie Sunwoo, president of DAFgiving360. “They let donors move assets into a portfolio, take their time, and build a thoughtful plan for giving.”

The tax law changes gave donors extra motivation. Starting this year, the top tax benefit for charitable giving dropped from 37% to 35% for high earners. Researchers at Indiana University’s Lilly Family School of Philanthropy estimate that change alone could reduce annual giving by $4.1 billion to $6.1 billion.

The bill also tightened deductions for itemizers. Under the new rules, donors can only deduct charitable gifts that exceed 0.5% of adjusted gross income. For someone earning $2 million a year, that means the first $10,000 in donations offers no tax benefit at all.

That looming shift led many advisors to recommend “front-loading” donations. Tax planner David Perez said he encouraged clients to fund their DAFs with three to five years’ worth of giving before the changes kicked in.

Once the money is parked in a DAF, donors can still spread out grants to charities over time – even if the tax perks are no longer as generous.

Perez expects the new rules to further push donors away from writing checks directly to charities. DAFs come with trade-offs: they can’t be used for gala tickets or fundraising events, and recommending grants takes more effort than pulling out a checkbook.

“If people really want to do it the ‘right’ way through a donor-advised fund, it’s more steps,” Perez said. “At some point, donors will ask themselves whether it’s worth the hassle.”

For now, though, the message from 2025 is clear: when taxes and markets line up just right, donor-advised funds become the vehicle of choice – and charitable giving can surge in a hurry.