Give Smarter in 2025: How Donor-Advised Funds Can Optimize Your After-Tax Wealth
Many high-net-worth investors underestimate how much a DAF can save, both in taxes and in long-term charitable potential.
Key Insights
- DAFs decouple charitable giving and deduction timing: You become eligible to receive the charitable deduction immediately but can decide when to grant later, turning generosity into a year-round tax strategy.
- Avoid capital gains: Donating appreciated stock instead of selling it can eliminate taxes on unrealized gains while maximizing your charitable tax deduction.
- Integrate with planning: Coordinating DAF contributions with Roth conversions or other income events can magnify after-tax efficiency.
- Legacy and family value: Structured giving through a DAF fosters multigenerational involvement and teaches stewardship.
- Tax-gain harvesting: In lower-income years, you can sell some investments that have gone up and potentially pay little or no long-term capital gains tax. This sets a new starting price for future taxes and can work well alongside tax-loss harvesting before December 31.
- For a limited time: Learn how you can receive a 1:1 match on your donor-advised fund contribution of up to $5K through December 31, 2025 if you qualify.
Your Charitable Dollars Could Be Working Harder and Saving You More Than You Think.
Imagine giving to causes you care about and potentially reducing your tax bill at the same time.
This isn’t a loophole; it’s a well-established, IRS-recognized framework called a Donor-Advised Fund (DAF). Yet despite its clear benefits, many affluent professionals still donate the old way, missing opportunities to preserve wealth and amplify impact.
The numbers tell the story. Charitable assets in DAFs reached $251.5 billion in 2023, growing nearly 10% year-over-year. But most high-income donors still give without integrating these tools into their tax plan, leaving efficiency on the table.
Here’s what most people miss: a DAF isn’t just about giving; it’s about optimizing the intersection between philanthropy, taxes, and investment growth.
Let’s break down what to know and how to give smarter in 2025.
What Is a Donor-Advised Fund?
A donor-advised fund (DAF) is a charitable giving account that lets you contribute assets now, receive the tax deduction now, invest the assets tax-free, and recommend grants to charities over time.
A donor-advised fund is a giving vehicle administered by a public charity that accepts your cash or other assets, offers you an immediate charitable deduction, allows tax-free growth while you direct where, when, and to whom to donate the money.
How a DAF Works
- Contribute cash, publicly traded stock, or other eligible assets to the DAF.
- Invest the contribution in one or more portfolios where growth is tax-free while held inside the account.
- Grant to one or more qualified charities at times you choose, without needing to donate immediately.
This lets you open a DAF account, fund it digitally, invest with flexibility, then grant when you’re ready.
Because the contribution is irrevocable, you claim your deduction in the year of contribution even if you grant later.
The decoupling of tax-deduction timing from charitable-grant timing is what makes the DAF structure powerful for strategic giving.
According to the NPT 2024 DAF Report, grants from DAFs in 2023 were $54.77 billion, highlighting how established DAFs continue to deploy capital.
To qualify for the 1:1 donor advised fund match, you must maintain an active advisory relationship with Evergreen Wealth and initiate your contribution by December 31, 2025. Clients with $1,000,000 or more in assets under management (AUM) as of the contribution initiation date qualify for a match up to $5,000; clients with under $1,000,000 AUM qualify for a match up to $1,000.
This tool is for illustrative and educational purposes only. It is designed to help you explore potential tax implications of contributing appreciated assets to a donor-advised fund (DAF) and is not intended to provide, and should not be relied upon for, tax, legal, or accounting advice. The calculations presented are based on general assumptions (including federal and state tax rates, filing status, and capital gain treatment) and may not reflect your specific situation. Tax benefits will vary based on individual circumstances not captured by this tool, and actual results may differ.
Potential Tax Advantages of DAFs
Immediate Deduction
When you contribute to a DAF (and itemize your deductions on your federal tax return):
- Cash donations are deductible up to 60% of your adjusted gross income (AGI).
- Contributions of appreciated assets (like stock held longer than one year) are typically deductible up to 30% of AGI for the fair-market value.
- If you exceed those limits, you can carry forward the unused deduction for up to 5 years.
Reduce Capital Gains Tax
If you have highly appreciated stock, you can donate the stock itself instead of selling it.
Example:
You purchased stock for $40,000 and it’s now worth $100,000.
That can mean significant tax savings both the immediate deduction and the potential avoidance of capital-gains tax.
After-Tax Wealth Growth
By donating appreciated assets, you can both reduce your personal tax burden and increase your charitable-capital base.
Bunching Strategy
What is Bunching?
Bunching means grouping multiple years of charitable contributions into a single tax year so your total deductions exceed the standard deduction threshold. This allows you to itemize and capture a larger deduction now, while using your DAF to distribute grants over time.
For clients who donate each year but don’t always exceed itemized deduction thresholds, one tactical approach is bunching donations. For example:
- Year 1: Fund DAF with two years of giving → claim deduction now.
- Years 2-3: Grant to charities from DAF while taking standard deduction.
This lets you pull forward deductions into a higher-tax year and itemize your deductions while investing the funds tax-free in the interim until you make your donations. Consult your tax advisor before implementing a bunching strategy.
Strategic Advantages Beyond Taxes
- Simplified record-keeping and receipts
- Flexible timing for contributions and grants
- Potential family legacy involvement across generations
- Access up to 1.7 million qualified charities
These factors elevate DAFs from a “charitable check” to a strategic giving vehicle that can align with investment, tax, and legacy goals.
Capabilities to Look For in a DAF Account
Tax Efficiency Through Integrated Strategies
Evergreen Wealth’s is designed to provide tax efficiency through integrated strategies connecting charitable goals with wealth growth.
- Tax-gain harvesting: Can offset realized gains via DAF contributions.
- Tax-loss harvesting: Capture losses and reinvest appreciated positions for DAF funding.
- Retirement account coordination: Align DAF gifts with Roth conversions.
- Estate & family analysis: Use DAFs for multigenerational planning and legacy.
Learn more about our 12 tax strategies
DAF vs. Other Giving Vehicles
Before choosing your charitable vehicle, it helps to understand how donor-advised funds compare with other popular giving options like private foundations or qualified charitable distributions.
You may want to consider choosing a:
- DAF for high deduction limits, tax-free growth, low admin burden, and flexibility.
- Foundation for ability to hire employees (and more paperwork).
- QCD if you are 70½+ with IRAs and direct giving goals.
How to Set Up a Donor-Advised Fund
How-To Steps
- Meet with a personal advisor for free to create your personalized tax-smart investment plan.
- Open your Evergreen Wealth accounts.
- Fund the DAF with cash, bonds, stocks, ETFs or mutual funds.
- Invest charitable assets in one of more than a dozen crafted portfolios.
- Recommend grants to qualified 501(c)(3) charities.
Explore More About Donor-Advised Funds
Building a Legacy of Purposeful Giving
When your giving strategy is built with intent, you can gain more than tax efficiency; you gain clarity and control. By aligning your charitable vision with a structured plan, you translate generosity into lasting impact. Giving smarter means every dollar you contribute works harder for both your legacy and the causes you care about.
Evergreen Wealth Advisors (“Evergreen Wealth”) will match eligible client contributions to Daffy charitable giving accounts initiated through December 31, 2025. Clients with less than $1,000,000 in assets under management (AUM) with Evergreen Wealth as of the contribution initiation date are eligible for a match of up to $1,000, while clients with $1,000,000 or more in AUM are eligible for a match of up to $5,000. To qualify, clients must maintain an active advisory relationship with Evergreen and initiate their contribution by December 31, 2025.
For tax purposes, the timing of a charitable contribution is determined by when the contribution is completed, which may differ from the contribution initiation date. Clients should consult their tax advisor to determine the applicable tax year for any contribution.
Contributions may be made via ACH or Wire Transfer, credit card, or securities. If securities are contributed, Evergreen Wealth will determine the match amount based on the fair market value of the securities on the initiation date of transfer, as reported by the custodian or Daffy.All matching contributions from Evergreen Wealth will be made in cash directly to the client’s Daffy account. Clients may contribute multiple amounts but Evergreen Wealth will provide one match up to the limit per household.
Daffy is an independent, unaffiliated third party with no compensation arrangement with Evergreen Wealth. Clients pay no additional fees to open or maintain a Daffy account or make a qualifying contribution. Once accepted, contributions are irrevocable and become the property of the DAF sponsor. Clients should review the DAF sponsor’s terms and consult their tax, legal, and accounting advisors regarding their individual circumstances. Evergreen may verify eligibility and modify or end the program at any time.
Investment Advisory Services offered through Evergreen Wealth Advisors.
All investing involves risk, including the possible loss of principal and past performance does not guarantee future performance. The information provided is for educational purposes only and this material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy.Evergreen Wealth Corporation and Evergreen Wealth Advisors do not provide tax, legal, or accounting advice. Any discussion of tax treatment or benefits is general in nature, may not be applicable to all investors, and should not be relied upon to make financial or charitable decisions. To claim a charitable deduction, you must itemize your deductions, and actual tax outcomes will depend on your specific circumstances. You should consult your own tax, legal, and accounting advisors before engaging in transactions.
For additional information about Evergreen's investment advisory services and Donor Advised Funding, please refer to Evergreen’s ADV Part 2A and Form CRS, available here.
