Donor-advised funds, which allow donors to transfer assets, claim an immediate tax deduction and distribute money to charities over time, saw a surge in new accounts at the end of 2025 and into 2026, according to data reported by The Wall Street Journal on Monday.

The Rush To Act

At National Philanthropic Trust, donors opened more than 3,700 new accounts in November and December of 2025, a 123% increase from a year earlier. Vanguard Charitable saw nearly 2,600 new accounts, a 99% rise. DAFgiving360, formerly Schwab Charitable, reported contributions climbing roughly 50% year over year in the fourth quarter.

The new tax law created a floor on charitable deductions. Starting this year, donations below 0.5% of adjusted gross income are no longer deductible. For someone earning $1 million annually, giving $10,000 to charity, $5,000 of that donation becomes non-deductible under the new rules.

Funding a DAF with appreciated stock lets donors sidestep capital-gains taxes while locking in a full deduction at the time of transfer. The money grows tax-free inside the fund and can be distributed to charities over several years.

Broader Tax Picture

President Donald Trump called 2026 the “largest tax refund season ever,” crediting the One Big Beautiful Bill with stabilising the tax landscape through 2030, the same legislation that created the charitable deduction changes now driving wealthy Americans toward donor-advised funds.

Average federal tax refunds rose 10.9% to $3,571 as of March 20, according to IRS data, with more than $202 billion issued so far this filing season.

A bipartisan Senate bill introduced March 3 would further expand DAF access by allowing retirees aged 70½ and older to route qualified charitable distributions directly from IRAs into donor-advised funds, a move tax experts say could deliver a full 37% marginal tax benefit while also reducing taxable required minimum distribution income.

Adding to household pressures, U.S. headline inflation is projected to rise from 2.6% in 2025 to 4.2% in 2026, driven largely by an energy shock tied to the ongoing war in Iran, according to the OECD. This is expected to tighten budgets already navigating higher tax thresholds.

In total, 3.56 million donor-advised funds held $326 billion in 2024, according to the Donor Advised Fund Research Collaborative, WSJ reported.

Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.

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