Giving to donor-advised funds surges on expiring tax cuts and a hot stock market – CNBC

Background

Donor-advised funds (DAFs) have grown in popularity as a tax-efficient conduit for philanthropy: donors contribute cash or property to the fund, claim an immediate tax deduction, and later recommend grants to charities. That structure became especially attractive in 2025 after sustained stock-market gains boosted valuations across equities and index funds, creating more unrealized gains that donors could transfer into DAFs. Historically, DAFs have drawn criticism from some nonprofit watchdogs for the time lag between contribution and final grant, but advisers say the vehicle’s tax and liquidity benefits outweigh those concerns for many high-net-worth donors. In parallel, lawmakers reworked portions of the individual tax code in the One Big Beautiful Bill Act enacted in July 2025, changing effective benefits for charitable gifts starting the next year.

The new law reduced the top effective tax benefit for charitable giving from 37% to 35% for the highest earners, and it tightened itemizer incentives by allowing deductions only for donations above 0.5% of AGI. For wealth advisers and estate planners, that combination created a predictable deadline: contributing to a DAF before 2026 preserves the older, more generous tax treatment. Institutional actors such as family offices, private banks and philanthropic advisors amplified those signals by urging clients to accelerate giving, while the market’s strong performance made in-kind donations (stock, funds, crypto, real estate) more attractive than cash.

Main Event

DAFgiving360, one of the largest DAF administrators, recorded $9.9 billion in grants to charities for 2025, a jump of $2.2 billion — roughly 28% over 2024. Julie Sunwoo, DAFgiving360’s president, told reporters the organization saw a record share of non-cash contributions in assets that had appreciated. That trend reflects two forces: donors seeking to avoid capital-gains tax on appreciated assets, and advisers encouraging clients to fund DAFs before the tax changes take effect in 2026.

Tax planners described a common playbook in late 2025: clients were advised to make multi-year contributions into a DAF, capturing the immediate deduction now while enabling a staggered grant schedule to charities later. David Perez, a tax planner quoted by reporters, recommended clients fund DAFs with three to five years of planned donations. Once assets reside in the DAF, they can continue to appreciate tax-free while the donor decides how and when to distribute grants.

Practically, DAFs are simpler than many direct gifts of illiquid holdings. Donors who want to move large, appreciated positions into philanthropic hands can transfer shares or property to the fund rather than sell and pay capital gains. That convenience appears to have driven the 74% non-cash contribution share DAFgiving360 reported for 2025, which included ETFs, index funds, crypto and real estate assets.

At the same time, advisers note trade-offs. DAFs cannot be used for certain donor benefits — for example, purchasing gala tickets through a DAF does not qualify as a charitable contribution in the same way buying directly from a charity might. Recommending and processing a grant from a DAF can also take longer than writing a personal check, adding administrative friction for donors who favor one-off, event-linked giving.

Analysis & Implications

The surge in DAF activity illustrates how tax policy and market performance together shape philanthropic behavior. When tax incentives are scheduled to change, well-advised donors tend to accelerate timing to lock in benefits; when markets rise, in-kind donations of appreciated securities become more compelling. Combined, those factors created a powerful incentive in 2025 for affluent donors to move assets into DAFs before the 2026 rules took effect.

Policy changes that lower the effective tax benefit of a charitable dollar — from 37% to 35% for top earners — reduce the relative after-tax cost of giving and therefore are expected to dampen some forms of charitable support over time. The Lilly Family School of Philanthropy’s estimate that the cap could shrink giving by $4.1 billion to about $6.1 billion annually highlights that lawmakers’ technical changes can have meaningful budgetary and nonprofit-sector consequences.

For nonprofits, the near-term influx of DAF grants may help budgets in the short run, but the timing of grant recommendations matters. Some charities receive sizable payments from DAFs only after donors finalize their recommendations, creating volatility in revenue forecasting. Nonprofits that rely on recurring donor checks could see a structural shift if high-net-worth donors increasingly prefer DAFs as the primary vehicle for philanthropic activity.

Looking ahead, advisers say the new tax baseline may change the mix of charitable giving rather than end it: DAFs will likely remain popular for handling appreciated and hard-to-liquidate assets, while some donors may reduce small, annual checkbook gifts that no longer yield meaningful tax offsets under the 0.5% AGI floor for itemizers. Regulators and philanthropies will be watching whether the DAF growth observed in 2025 represents a one-time pull-forward or a lasting reallocation of how Americans donate.

Comparison & Data

DAFgiving360’s reported totals show a pronounced year-over-year jump; the $2.2 billion rise equates to a 28% increase. The 74% non-cash contribution figure for 2025 indicates donors favored in-kind gifts that avoid immediate capital-gains realization. These patterns point to a mix of timing effects (accelerating gifts before tax law change) and valuation effects (strong markets increasing the attractiveness of donating appreciated assets).

Reactions & Quotes

DAFgiving360’s president framed the trend as a practical response to donors’ needs to handle appreciated, hard-to-liquidate assets.

“DAFs really excel at helping people move appreciated or hard-to-liquidate assets into a managed portfolio and plan how to give them out over time.”

Julie Sunwoo, President, DAFgiving360 (organization)

Tax advisers described tactical moves they recommended clients make before the 2026 changes.

“I advised clients to fund their DAFs with three to five years of contributions to lock in current tax benefits.”

David Perez, Tax Planner (practitioner)

Observers in philanthropy and academia cautioned that policy shifts can have measurable downstream effects on nonprofit revenue streams.

Unconfirmed

• Whether the 2025 surge represents a one-time pull-forward or a persistent structural shift in giving remains unclear and will require multi-year data to confirm.
• Exact breakdowns of non-cash asset types (shares vs. crypto vs. real estate) beyond DAFgiving360’s summary were not publicly itemized and need further verification.
• Projections of the bill’s long-term effect on small-dollar donors versus major donors are model-based and subject to revision as real-world behavior evolves.

Bottom Line

In 2025, donors accelerated DAF contributions to capture pre-2026 tax advantages while taking advantage of a rising market that increased the value of in-kind gifts. The result was a record $9.9 billion in grants reported by DAFgiving360 and an unusually high share of non-cash donations. For charities, the inflow offers short-term benefits but may complicate revenue predictability if grant timing shifts.

Policy changes in the One Big Beautiful Bill Act are likely to reshape giving incentives going forward: itemizer limits and a lower top effective benefit may reduce certain types of deductible donations, particularly smaller recurring gifts. Philanthropy leaders, advisers and nonprofits should track DAF activity and advocate for transparency and timing clarity so organizations can adapt their fundraising and budgeting strategies.

Sources

• CNBC — news report summarizing DAFgiving360 data and interviews (media).
• DAFgiving360 — donor-advised fund administrator (organizational report/official).
• Indiana University Lilly Family School of Philanthropy — academic analysis and estimate of policy impact (academic/research).