News for Donors

Getting a jump on year-end charitable giving plans?

'Bunching' is important to consider if you don't want to find yourself scrambling to synchronize tax planning, financial planning and gifts to favorite nonprofits. 

Changes to charitable tax deduction rules mean thoughtful planning is more important than ever. Here's a look at what that means for you.

Recent changes require new approaches

Until recently, 'bunching' wasn't a common term. That’s because the standard deduction (which itself has an interesting history) under the Internal Revenue Code’s income tax rules was much lower than it is now. 

Many donors easily met the criteria to itemize deductions - including their charitable contributions - on their income tax returns. That changed after the Tax Cuts and Jobs Act of 2017 significantly increased the standard deduction starting in 2018. 

Further changes to the charitable deduction rules under 2025’s One Big Beautiful Bill Act increased the complexity of charitable deduction thresholds because the new law, effective for 2026, imposes a 0.5% of adjusted gross income (AGI) floor for itemized charitable deductions and, for taxpayers in the highest tax bracket, a 35% cap on the tax benefit of those deductions. All of this means that thoughtful charitable planning is more important than ever.

How 'bunching' helps

What you need to know is that 'bunching' charitable gifts might be useful to you, and it’s worth discussing with your tax and financial advisors as soon as you can. 

The essence of bunching is that, rather than making similar-sized charitable donations every year, you would combine two or more years of charitable gifts up front into a single tax year. 

By concentrating gifts into one year, you may:

• Be able to accumulate enough deductions to make itemizing more beneficial than claiming the standard deduction.
• Achieve a greater tax benefit than you would by making smaller annual gifts and taking the standard deduction. 

How the Community Foundation helps

A Donor Advised Fund at the Community Foundation makes bunching especially attractive. Here's an example of how it works:

You can contribute several years' worth of charitable gifts to your DAF this year, generally be eligible to claim an income tax deduction for the current year, subject to applicable limitations, and then recommend grants to your favorite nonprofits over several future years. This allows your favorite organizations to continue receiving steady support while simultaneously maximizing your own tax benefits.  

Remember, too, that your DAF at the Community Foundation accepts appreciated securities, which may provide additional tax advantages in the right circumstances. That’s because you may be able to avoid capital gains tax on the highly appreciated stock you contribute to your Donor Advised Fund. 

What this means for you

Now is the time to begin conversations with your tax and financial advisors about bunching and about your charitable plans in general. Loop us in early and let us help you make the most of your giving.