Charitable Giving in 2026: Donor-Advised Funds, Foundations, Charitable Trusts, QCDs, and the New Deduction Rules

The federal tax rules for giving changed on January 1, 2026. Under the 2025 tax law (the One Big Beautiful Bill Act), itemizers now lose the first 0.5% of their adjusted gross income in charitable deductions each year, top-bracket donors get at most 35 cents of benefit per dollar deducted, and people who take the standard deduction can deduct up to $1,000 of cash gifts ($2,000 for joint filers). The 60% of AGI limit for cash gifts to public charities, which was due to expire, became permanent. The private foundation excise tax stayed at 1.39%; a House proposal to raise it for large foundations was dropped from the final law.

This guide compares the main giving vehicles under those rules and works through the numbers for gifts of stock, bunching, and IRA distributions. It covers how to give. How to invest for social or environmental outcomes is in our impact investing guide, and the rest of an affluent household's tax plan is in our high net worth planning guide.

The 2026 deduction rules

The standard deduction for 2026 is $16,100 for single filers and $32,200 for joint filers, so many households still do not itemize. For them, the new $1,000 or $2,000 deduction is the only federal benefit from ordinary cash giving, and a QCD is worth far more if they are old enough to make one.

Deduction ceilings still depend on the recipient and the asset, as IRS Publication 526 explains. Cash to a public charity or DAF can be deducted up to 60% of AGI, and appreciated stock held more than a year up to 30%, at market value. For gifts to a private non-operating foundation the limits are 30% for cash and 20% for appreciated property, and only publicly traded stock ("qualified appreciated stock") gets a market-value deduction; other property is deducted at cost. Amounts over the limits carry forward for five years.

The vehicles compared

Donor-advised funds

A DAF is an account at a sponsoring charity, such as the charitable arms of large brokerages or community foundations. You get the deduction when you contribute, the money is invested, and you recommend grants later. Legally the sponsor owns the assets and has the final say. DAF grants cannot pay for anything that benefits you, such as event tickets or a pledge you personally made. Many sponsors accept private company stock, restricted stock, or real estate after review, which is often simpler than doing the valuation work for a direct gift.

Private foundations

A foundation makes sense when a family wants to run a grant program over decades, hire staff, make grants to individuals or foreign groups under the stricter procedures the rules require, or involve the next generation in governance. The obligations are real:

• It must distribute roughly 5% of its non-charitable-use assets each year, the "minimum investment return" in Section 4942. A $5 million foundation must pay out about $250,000 a year, including reasonable administrative costs.
• It pays a 1.39% excise tax on net investment income, according to the IRS. On $300,000 of dividends, interest, and realized gains that is $4,170.
• Self-dealing rules bar most transactions between the foundation and its founders, family, and their businesses, even at fair prices, and the penalties fall on the individuals.
• Program-related investments, such as below-market loans to a nonprofit, count toward the payout. How to evaluate investments of that kind is in our impact investing guide.

Charitable remainder and lead trusts

A charitable remainder trust (CRT) is the classic tool for a large, low-basis asset. You transfer the asset, the trust sells it without immediate capital gains tax because it is tax-exempt, and it pays you a fixed amount (an annuity trust) or a fixed percentage of its value each year (a unitrust). Per the IRS rules for CRTs, the payout must be between 5% and 50%, and the charity's projected share must be at least 10% of the starting value. You get a partial deduction for that share. Payments to you carry out the trust's income in a set order, so part of each payment is taxed as ordinary income or capital gain until the deferred gain is used up.

A charitable lead trust (CLT) runs the other way: the charity gets payments first and the family gets what is left. It is mainly an estate and gift tax tool, and it works best when the Section 7520 rate is low, because the family's share is valued on the assumption that the assets earn that rate. At 5.6% for October 2026, lead trusts are less attractive than in years when the rate was much lower, and the opposite is true for annuity-style remainder trusts. Our trust planning guide covers the 7520 rate and the other family trusts it drives.

Gifts of appreciated stock

Giving shares you have held for more than a year to a public charity or DAF does two things: you deduct the market value, and neither you nor the charity pays tax on the gain. If you still like the company, you can use the cash you would have given to buy the shares back, which resets your cost basis to today's price. The wash sale rule does not apply because it covers losses, not gains. Shares with losses are better sold first: you take the capital loss and give the cash. Our tax-loss harvesting guide covers those rules.

Illustration: two married donors each give $50,000 of stock bought for $10,000, as their only gift of 2026. Both already itemize.

Selling the shares and giving the cash would give the same deduction but leave each donor owing the capital gains tax in the second-to-last row. A few details change the result: shares held a year or less are deducted only at cost, and gifts of S corporation stock are messy because the charity owes unrelated business income tax on its share of the company's income and on the gain when it sells (Section 512(e)), so many sponsors accept them only after review.

Bunching in the 2026 rules

Bunching combines several years of giving into one year, usually through a DAF, so that you itemize that year and take the standard deduction in the others. The DAF then spreads the grants across the years, so charities see no change.

Illustration: a married couple with $250,000 of AGI, $25,000 a year of other itemized deductions (state and local taxes and mortgage interest), and $20,000 a year of giving. The 2026 standard deduction is $32,200, and the tax is calculated on the 2026 joint brackets.

Bunching saves $3,462 over three years. Part of the gain comes from the new floor: giving every year loses $1,250 of deductions (0.5% of $250,000) three times, while bunching loses it once. The trade-off is that the $60,000 leaves the couple's hands in year 1.

For a household in the 37% bracket, the 35-cent cap limits the value of bunching, since deductions that used to save 37 cents now save 35. Timing gifts to a year of unusually high income, such as the year a business is sold, remains one of the most effective uses of a DAF.

Qualified charitable distributions

IRA owners who are at least 70½ can send up to $111,000 in 2026 straight from an IRA to a charity. The distribution counts toward required minimum distributions and is left out of income, which does more than a deduction for most retirees: it lowers AGI, which can reduce how much Social Security is taxed and the Medicare premium surcharges based on income. Because it is not a deduction, the 0.5% floor and the 35-cent cap do not apply.

Illustration: a retired couple in the 22% bracket who take the standard deduction give $10,000 a year. Taking $10,000 from the IRA and writing checks gives them at most the $2,000 non-itemizer deduction, worth $440. Sending the $10,000 as a QCD keeps it out of income, worth $2,200.

QCDs cannot go to donor-advised funds, supporting organizations, or most private foundations. The one-time election to put up to $55,000 of QCDs into a charitable remainder trust or charitable gift annuity comes out of the $111,000 limit and can be used only once. Our retirement planning guide and retirement income guide cover RMDs and withdrawal order.

Choosing, by situation

• Giving a few thousand dollars a year and taking the standard deduction: give cash directly and claim the $1,000 or $2,000 deduction, or use QCDs if you are 70½ or older.
• Itemizing and giving regularly: give appreciated stock instead of cash, and consider bunching through a DAF.
• A large one-time gain, such as a business sale or a stock that has run up: fund a DAF in that year, or a CRT if you also want income from the asset. The DAF and CRT need to be in place before the sale is agreed; a gift after a binding sale can still leave the gain taxed to you.
• A family that wants to run a grant program for decades, with staff and governance: a private foundation, often alongside a DAF for anonymous or small grants. Family offices that run foundations are covered in our family office guide.
• An estate well above the $15 million exemption with heirs you also want to benefit: charitable lead trusts and charitable bequests, planned with an estate attorney.

Before you give

1. Confirm the charity's status with the IRS Tax Exempt Organization Search and read its latest Form 990.
2. Get a written acknowledgment for any gift of $250 or more, and a qualified appraisal for non-cash gifts over $5,000 other than publicly traded stock.
3. For stock, transfer the shares; do not sell them first.
4. Project your AGI for the year so you know the 0.5% floor and whether bunching helps.
5. If you are 70½ or older, ask your IRA custodian to send QCDs directly to the charity before the year's RMD is taken.
6. Review the plan with your CPA each fall, before year-end deadlines, and with a fiduciary adviser if gifts are part of a larger estate plan.

This guide is for informational purposes only and does not constitute tax, legal, or investment advice. Tax rules and limits are as of September 2026, and the worked examples are illustrations using simplified assumptions. State tax treatment of charitable gifts varies. Consult a CPA or estate planning attorney before making large gifts or creating a foundation or charitable trust.