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, now is a good time to revisit charitable giving strategies that could help clients achieve their 2026 planning objectives.
A strategy that deserves special attention this year is "bunching" charitable contributions. Bunching became widely discussed after the Tax Cuts and Jobs Act of 2017 substantially increased the standard deduction for calculating income tax. According to important historical data, that change caused many taxpayers who previously itemized to start claiming the standard deduction instead, since their annual charitable gifts and other deductible expenses were no longer sufficient to exceed the standard deduction threshold.
Since the beginning of 2026, charitable planning has become even more nuanced. 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.” Charitable giving remains highly tax-efficient, in many cases; however these changes make proactive planning more important than ever.
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 that year while claiming the standard deduction in subsequent years, potentially producing greater cumulative tax savings over time.
For many of your clients, a Donor Advised Fund at the Community Foundation of Anne Arundel County (CFAAC) serves as an effective vehicle for a bunching strategy. A client can make a single, larger contribution to the Donor Advised Fund, generally claim the charitable deduction in the year of the contribution under Internal Revenue Code Section 170(a), and then recommend grants to favorite nonprofits now and in future years. The timing of the income tax deduction is separated from the timing of charitable distributions, allowing the client’s favorite nonprofits to continue to receive consistent annual support even in years when the client isn't making new contributions.
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 CFAAC’s gift planning team, can help clients evaluate whether this strategy aligns with both their philanthropic goals and their broader financial plans and then implement the strategy without rushing through it.
Bunching is not the only strategy worth discussing well before year end. Here are two more reminders for your client conversations:
- Charitable planning opportunities are typically even more attractive when appreciated securities are involved. Under Internal Revenue Code Section 170(e)(1)(A), a client who contributes long-term appreciated publicly traded securities to a public charity, including a Donor Advised or other type of fund at CFAAC, generally may deduct the property's fair market value (subject to the applicable adjusted gross income limitations) while avoiding recognition of the built-in capital gain that would otherwise result from a sale. This is usually a better tax outcome than giving cash.
- Qualified Charitable Distributions (QCDs) IRA owners age 70 ½ or older to give directly to charity tax-free, up to the 2026 annual limit of $111,000, even before required minimum distributions begin, which can lower the adjusted gross income and reduce taxes on Social Security benefits and Medicare premiums. Because a QCD must go directly to a qualifying charity rather than into a Donor Advised Fund, this strategy works well for clients who want to support CFAAC's community grantmaking directly, such as through the Fund for Anne Arundel or another CFAAC fund that accepts direct gifts. For a subset of your clients, this distinction is worth walking through given the new charitable deduction limitations under the One Big Beautiful Bill Act.
CFAAC is honored to work alongside you and other advisors all year long to help structure charitable gifts in ways that advance your clients' philanthropic goals while making the planning process as seamless as possible. Whether you need help thinking through fund options, a needs assessment for a client's giving goals, or training for your team on how these strategies work in practice, reach out to Thomas Perkins, CFAAC's Director of Gift Planning, at thomas@cfaac.org. Reach out anytime to get a jump on year-end planning.