Charitable Giving Strategy in a New Tax Era with Fred Kaynor

For those who aren't familiar, can you tell us a little bit about DAFgiving360 and what you do there?

[00:00:32] Fred Kaynor: Absolutely. DAFgiving360 is one of the largest national donor-advised funds in the country. We're operated as a 501(c)(3) independent charity whose mission is to increase charitable giving in the United States. We accomplish this by offering donors, financial advisors, and others, access to a best in class donor-advised fund platform, as well as additional philanthropic resources that really ultimately make charitable giving both efficient and effective. And for those that aren't familiar with donor-advised funds, essentially a donor-advised fund, or what we call a DAF is an account for charitable giving. It provides a simple tax smart way to give to charity. They are accounts that function to help donors maximize their supportive charities by making the process as scalable and efficient as possible, facilitating the process of getting dollars out to the charities when they choose to do so, and doing it in the most tax smart way we possibly can. And our donors typically contribute things like cash, securities, or other non-cash assets like private business interests, real estate, and so forth. And we liquidate those assets.

Once they've been contributed, we deposit the proceeds of the liquidation event into the account, and then they're invested for hopefully potential tax-free growth while they're there, until the donor is ready to recommend grants to the charities that they choose to support. As you can imagine, Doug, with our solution, in fact, with any solution that facilitates charitable giving, there are always many tax considerations that come into play when trying to do it in the most effective and tax efficient way possible.

[00:02:13] Doug Heikkinen: Absolutely, Fred. Can you share a little bit more about those considerations and how to navigate them?

[00:02:20] Fred Kaynor: Yeah, absolutely. So donors, really at their core, we find that donors give to charity for the right reasons. They want to be philanthropic, they wanna be generous. They wanna support causes and charities that really align with their values and their charitable giving goals. But in order to do so as effectively as possible, they are more and more turning to solutions like donor-advised funds as a way to sort of minimize the tax exposure and in so do we maximize the impact that they have on those causes. And there's multiple different practices to consider. Again, as I said before, DAFs are accounts that are held at a public charity. So when a donor makes a contribution to a donor-advised fund, that contribution is eligible for a current year tax deduction. So that's the first thing. And again, when they make the contribution to the account, it's already qualified for that tax deduction. It's in the account ready to be granted at whatever time they choose.

They don't have to rush at the end of the year to make sure they get their annual gift to their alma mater or their house of worship, but they can do it over time. Donors also practice a variety of different tax strategies frequently in order, again, to maximize the amount that they have available to give to charity.

And in so doing mitigate tax exposure that makes it easier for them to give efficiently. One of those practices is something called "bunching," or combining multiple years of giving into a single year. And this practice can help donors surpass the standard deduction amount, and allows them to itemize deductions in that particular year. And we find that with bunching donors can maintain consistent support for charities over time by granting to their favorite causes or charities over multiple years with the funds that they've already placed in the account. So it's a very, very smart, tax efficient way to fulfill their charitable giving goals. And with DAFs, tax strategies like itemizing versus non itemizing are also really important to consider. A lot of donors at DAFgiving360 work with financial advisors to help them navigate these considerations. Today we work with over 5,000 advisors and 77% of our DAF accounts are associated with those financial advisors.

What that says to us is the financial advisor is playing more and more of an increasingly important role in the context of helping these individuals and families manage their philanthropic resources. So we have a lot of articles and thought leadership pieces for advisors that help outline the various tax smart strategies that they can consider for those clients that are philanthropically minded.

[00:04:58] Doug Heikkinen: It sounds like advisors can play a really critical role in charitable giving. Can you speak to the new tax changes for charitable giving in 2026 that advisors may need to know about?

[00:05:10] Fred Kaynor: I sure can. And I want to say at the outset, there's a whole lot in this bill. And we are still all in the industry trying to make sure that we understand it and navigate it and inform our donors and financial advisors on considerations for how to manage it as it relates to charitable giving.

So I could certainly give it my best shot. The One Big Beautiful Bill Act, or OBBBA, was passed by Congress in 2025 and is now in effect. And it included legislation alterations to the federal tax rules that relate specifically to charitable deductions. These rules, in effect, they impact both people with itemized deductions as well as those who take the standard deduction. The IRS's inflation adjustment for 2026 also added new considerations into the mix. So there's a lot to unpack. And there's a lot of information and we are getting our arms around it. But there's, again, there's certainly changes relative to the previous year as it relates to tax benefits or tax implications for charitable giving.

[00:06:22] Doug Heikkinen: Got it. What are some specific examples of these tax law changes that took effect in 2026?

[00:06:28] Fred Kaynor: Great question. First and foremost, I think it's important to point out that there's a new hurdle to jump for donors who itemize can take that deduction. Starting in 2026, itemizers must clear a new 0.5% of adjusted gross income or AGI floor before charitable gifts become deductible. And we may see as a result of that, an increase in gifts or in what I referenced earlier, bunching, due to this change. Contributing non-cash assets like stock, appreciated stock, restricted stock, real estate, collectibles, private business interests and so forth will also be another effective way to help exceed that floor while at the same time potentially unlocking additional tax advantages. So that's one big consideration. The next is, there's a new limit at the top end of, on charitable deduction values under the new tax law. This means that taxpayers in the 37% federal income tax bracket will see the value of their charitable deduction benefits capped at 35%. That's another big change from the previous year. There is also a universal deduction for non-itemizers, and that's a really important point. This is something also new, that is new to this year as a result of this new tax law.

So taxpayers who take the standard deduction can now deduct up to a thousand dollars as single filers, or $2000 as married couples who are filing jointly for cash gifts that are made directly to qualified operating charities. And for people who don't itemize. This gives them a new way to reduce their tax bill while supporting causes and charities that are important to them. And it's a great development actually. This change will likely provide tax benefits to a large number of taxpayers who previously donated but didn't itemize. And I believe the number of people that take the standard deduction hovers around 90%. So this is a great benefit to those people that don't itemize their return, but take that standard deduction. And importantly as it relates to that the new deduction excludes DAF contributions. So we don't necessarily think that that is going to have an impact on donations to DAFs. Many of our donors use multiple forms of giving. They have a private foundation, they have a community foundation, they have, a national donor-advised fund.

They have a whole host of different vehicles because there's multiple different objectives with these sort of growing more complex philanthropic plans that our donors are embracing. But contributing to their DAF, volunteering, donating goods. The DAF is one component of their broader philanthropic plan. And we expect multiple forms of this generosity that are going to continue to grow and be used. Because, these people, we've seen, based on the results this year, Doug, we've never, ever seen such extraordinary generosity. And it's clear that people are giving for the right reasons, not just for the tax benefits, but recognizing that the need has really never been greater and they're really rising to the occasion. And finally the 60% AGI limit is now permanent. So that means that donors will continue to have the ability to deduct cash gifts to public charities up to 60% of their AGI. This higher limit, it's up from the historical 50% cap, give donors flexibility to make and fully deduct large cash gifts in a single year. Bear in mind that 60% limit applies to public charities, including DAFs. So cash donations to private foundations still remains capped at 30%, where this 60% applies to cash, across the board for any contribution that's being made to an actual public charity. A lot of information.

[00:10:22] Doug Heikkinen: Wow, that is a lot to digest and advisors are very lucky to have you and your team to help them with these interesting differences. Can you give a little more detail on donating non-cash assets?

[00:10:38] Fred Kaynor: On donating, non cash assets? Sure, absolutely. Donating on cash assets, what we try to do with our donors is, you know, part of the benefit to our solution is trying to help them be as thoughtful and strategic as possible to achieve maximum impact on their giving. And what that frequently means is that what is easiest to give isn't necessarily the best type of donation to make because it doesn't necessarily carry with it the most advantageous tax benefits associated with giving. So, generally we find that more and more people have recognized this and that two thirds, if not more, at this point of contributions that we currently receive from our donors are actually in the form of investment assets. Appreciated non-cash assets that have been held for a year or more. And those really are the most tax advantaged types of assets to give if they're truly trying to achieve maximum impact. Donating appreciated assets that are held for a year or more directly to a public charity, including a donor-advised fund, can help donors eliminate the capital gains that they would otherwise incur if they were to sell those assets first and then donate the proceeds. So that, in other words, we are accepting those contributions and liquidating those assets on their behalf. And in so doing that means that they are no longer subject to the cap gains that they would otherwise be if they were to sell them themselves. So what they would be subject to, which can be up to 20% of the value of the asset contributed, is now made available to go to the charities that they're choosing to support.

So there's a tremendous benefit in our ability to help them contribute those most tax efficient types of gifts into their donor-advised funds. And when you combine that with tax benefits that we just talked about, it's a really powerful strategy and it's really a very effective way for them to achieve maximum impact with they're giving.

[00:12:31] Doug Heikkinen: That's great. It sounds like advisors can make a huge impact in helping their clients navigate these changes in tactics. Do you anticipate 2026 to be a big year for charitable giving?

[00:12:40] Fred Kaynor: You know, I'm always sort of reluctant to predict, but I will say this. If 2026 is anything like 2025, it's going to be a record year. Last year alone, Doug, our donors granted just shy of $10 billion to charity. That is an enormous amount. I believe that's 28% more than the previous year. On giving Tuesday alone, which is sort of the unofficial day that marks the beginning of the giving season, we saw donors grant $80 million to over 15,000 charities just in one day.

It's pretty remarkable. As well, our donors granted at a pace of more than $27 million per day throughout all of the entirety of 2025. Donors supported more than 165,000 charities through 1.5 million grants, which is a 20% increase in granting over the previous year. So we saw,

A particularly active year end giving season, likely in part due to some of these imminent tax law changes. I think people fully understand and recognize the benefits of the previous tax law and just wanted to make sure that they could maximize the impact of their giving before the new law took effect in 2026.

We saw a lot of donors accelerate their generosity in the last weeks of the year. But every year, the fundamental generosity of our donors really shows during the last months of the year. It's just a seasonal thing we try to do, the beauty of our solution is you can contribute at any time and grant to whatever charity you choose at any time. So we're trying to communicate more and more that there's no need for the year end rush, like there is when you're just giving independently. But even so, people just sort of associate the year end with the season of giving. And really the generosity we saw this year, Doug, was historic. So if that tells you anything, we're incredibly excited to see what our donors are going to do in 2026. There is a new tax law. There are some considerations and implications. We are here to help in any way possible. Our advisors and donors understand them, navigate them, and really use our solution in a way that's helped them going to truly achieve maximum impact.

[00:15:02] Doug Heikkinen: That was an incredible year, and let's talk about that help. It was an amazing year for your donors. Now, moving forward, what resources are available to donors and advisors navigating these changes?

[00:15:14] Fred Kaynor: We have a lot of resources and we're going to be providing even more. So, we recently published an in-depth article on the topic. We've entitled it What The One Big Beautiful Bill Act Means for Charitable Giving. The article goes deeper into some of the more specific considerations that we talked about earlier. It's available on our website, as I said, DAFgiving360.org. I think it does a really good job at providing very clear specific information on each and every one of the bill's components that relate to and theoretically impact charitable giving. So I think that is a great resource.

I would strongly encourage your listeners to consider hopping on our website, downloading that article and familiarizing themselves with the information. In addition to that, Doug, we have a wealth of online resources, including not just that article I mentioned. We have calculators, we have information on the implications to, and the benefits for, donating complex non-cash assets versus cash. Assets like real estate, cryptocurrency, equities, and so forth. And in addition to that. We work with advisors. We have an entire team, our charitable consulting team, that is dedicated to engaging with financial advisors to support them as they embrace more and more a priority of incorporating charitable giving and philanthropy into how they support their client's broader sort of wealth management.

So we have between the teams of people that engage with advisors and donors directly, the articles and tools and resources and calculators that we have available through our website, we have a wealth of information to really educate, inform, and ultimately advise on how to really utilize the donor-advised fund in the best possible way to achieve the best results.

[00:17:12] Doug Heikkinen: Awesome. Thanks Fred. So lastly, is there anything else you want to share with the listeners?

[00:17:19] Fred Kaynor: Gosh. I'd say just like to emphasize or reemphasize I guess, that DAFgiving360, our network of advisors, we're all here to help in any way we possibly can. Whether you're a donor or an advisor or it's an advisor reaching out on behalf of a donor, we're all navigating these changes, these tax law changes, together with the same fundamental goal in mind where we want to help people give with maximum impact. That's why we're here. That's why we've been growing as much as we have. And that is our responsibility.

Again, I go back to our mission, which is to increase charitable giving in the United States, and we do so by engaging with our advisors, our business partners, our donors, and everybody else to ensure that they use our solution in the best and most efficient way possible for them. DAFs, like DAFgiving360, remain an extremely effective and tax smart way to give to charity. And it's really suitable for anybody. It's not for just the uber wealthy. It's for everybody across the board that is philanthropically minded. So, I would just say familiarize yourself DAFgiving360, with DAFs in general, and once you've experienced it, I think you'll be probably pretty hard pressed to find a more efficient, low cost, tax smart way to really achieve maximum impact with your charitable giving.

[00:18:43] Doug Heikkinen: Well, Fred, congratulations on a great 2025. Let's buckle up for 2026 because it looks like it's going to be really, really busy. And thank you for being with us today.

[00:18:53] Fred Kaynor: Pleasure. Doug, as always, thank you very much for your time.

[00:18:55] Doug Heikkinen: To learn more about DAFgiving360, please visit DAFgiving360.org. We are on all social media platforms at Advisorpedia. Please give us a follow. For our producer Tory Miller and everyone at Advisorpedia, thank you so much for listening.