Charitable Bunching and Donor-Advised Funds: A Second-Half Strategy Worth Modeling
2026 changed the math on charitable deductions — a new 0.5% AGI floor for itemizers and a new above-the-line deduction for everyone else. Here's how bunching and donor-advised funds fit into the new rules.
Charitable giving got more complicated this year, not less. Two changes took effect in 2026 under the One Big Beautiful Bill Act: a new floor on itemized charitable deductions, and a new deduction for people who don't itemize at all. Neither change is a reason to give less — but both are a reason to think more carefully about how you give.
For clients who give consistently and have room in their giving budget, this is a good year to revisit whether bunching donations, using a donor-advised fund, or (for those over 70½) a qualified charitable distribution is the more efficient path.
What Actually Changed in 2026
If you itemize, charitable contributions are now subject to a floor equal to 0.5% of your adjusted gross income (AGI) — the first slice of your giving each year no longer counts toward your deduction. With $300,000 of AGI, that's the first $1,500 of donations in a given year. On top of that, for taxpayers in the top 37% tax bracket, itemized deductions are now capped at a 35-cent-on-the-dollar benefit rather than the full marginal rate. If you don't itemize, there's a new offset: a $1,000 above-the-line deduction for cash gifts to a qualifying public charity ($2,000 for a married couple filing jointly), available only if you take the standard deduction.
Why Bunching Is Worth a Second Look
Bunching means combining several years of charitable giving into a single tax year — enough to clear both the standard deduction and, now, the new 0.5% of AGI floor — then taking the standard deduction (or giving nothing additional) in the years between. A donor-advised fund is usually the vehicle that makes this practical: you contribute the bunched amount to the DAF in one year, take the tax deduction in that year, and recommend grants to charities on whatever timeline you'd normally give on. The Greater Kansas City Community Foundation is one option many of our clients already use for this.
Where a QCD Still Wins
If you're 70½ or older, a qualified charitable distribution works differently — and better, in some cases. A QCD moves money directly from your IRA to a qualifying charity, up to $111,000 in 2026, and excludes that amount from your income entirely rather than taking it as a deduction. Because it's an exclusion, not a deduction, it bypasses the new 0.5% of AGI floor and the 35% itemized deduction cap completely, and it counts toward your required minimum distribution if you have one. For clients who are charitably inclined and already taking RMDs, a QCD is often the most tax-efficient dollar-for-dollar way to give, regardless of whether you itemize.
The Two Aren't Mutually Exclusive
Bunching through a DAF and using QCDs can work side by side, generally split by account type: a DAF draws from taxable brokerage assets, a QCD comes from an IRA. If most of your giving currently comes out of a taxable account, but you also have IRA assets and are over 70½, it's worth checking whether shifting some of that giving to a QCD makes more sense than funding it from the DAF.
The Windward Approach
Because charitable giving intersects with your tax bracket, your AGI, your RMDs, and now this year's new floor and cap, we model it as part of your broader tax picture rather than as a separate philanthropic decision. If your giving has been on autopilot for the last few years, 2026's rule changes are a good reason to revisit the structure, not just the amount.
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