Donor Advised Funds (DAF)

How it works

• Contribute appreciated investments (such as PG preferred shares) to a DAF.
• Receive a charitable tax deduction in the year of the contribution.
• Recommend grants to charities anytime in the future.



Funds inside the account can remain invested and potentially grow tax-free until they are granted to charities.

Why clients use them

• Tax efficiency: Donating appreciated investments may allow you to avoid capital gains taxes while still receiving a deduction for the full market value.
• Bunching charitable deductions: Instead of giving smaller amounts each year, you can contribute several years of charitable giving at once to potentially maximize the tax benefit.
• Flexibility: You receive the deduction today but can distribute donations to charities gradually over time.
  

When it can be most helpful

A DAF can be especially helpful in higher-income years, such as when you:

• Exercise stock options
• Coordinated with stock sales (ie: realized capital gains) or Roth conversions
• RSU’s vest
  

Example

Charitable Tax Planning takes advantage of itemized deductions vs. Standard Deduction Beginning in 2026, charitable deductions are only allowed above 0.5% of Adjusted Gross Income (AGI).

• AGI: $300,000 MFJ (0.5% threshold: first $1,500 of gifting not deducted)