By Kim Alvarez, Vice President – Philanthropy, The Foundation for Enhancing Communities
For many attorneys, CPAs and financial advisors, the last weeks of summer mark the beginning of year-end planning season. As clients return from vacations and turn their attention to tax and financial decisions, it is a good time to revisit charitable giving strategies that may help them meet their 2026 goals.
That conversation is especially important this year. Changes to the federal tax treatment of charitable gifts have made planning more nuanced, particularly for clients who are deciding whether to itemize deductions or claim the standard deduction.
One strategy worth revisiting is “bunching” charitable contributions. While the concept is not new, changes taking effect in 2026 may make the timing of charitable gifts even more important. Starting the conversation now gives clients time to consider whether bunching or another charitable strategy fits their broader financial plans before year-end deadlines arrive,
Why Bunching Matters in 2026
The “bunching” concept gained wide attention when the Tax Cuts and Jobs Act of 2017 substantially increased the standard deduction for calculating income tax. According to key historical data, this change led many taxpayers who previously itemized deductions to claim the standard deduction instead because their annual charitable gifts and other deductible expenses no longer exceeded the standard deduction threshold.
Since the beginning of 2026, charitable planning has become even more nuanced. The One Big Beautiful Bill Act added a new limitation under Internal Revenue Code Section 170 requiring that itemized charitable deductions must generally exceed 0.5% of adjusted gross income before a deduction is available. In addition, Section 68 now effectively limits the tax benefit of itemized deductions for taxpayers in the highest marginal income tax bracket to 35%. These two new provisions are sometimes called the “floor” and the “cap.” Although charitable giving remains highly tax-efficient in many cases, these changes make proactive planning increasingly important.
How Bunching Charitable Gifts Works
Here’s how it works:
- Rather than making charitable gifts in roughly equal amounts each year, a client may benefit from consolidating two or more years of planned charitable contributions up front into a single tax year.
- By concentrating, or “bunching,” donations into one year, the client may be better positioned to itemize deductions in that year while claiming the standard deduction in subsequent years, potentially producing greater cumulative tax savings over time.
Using a Donor-Advised Fund for Bunching
For many of your clients, a donor-advised fund at The Foundation for Enhancing Communities (TFEC) serves as an effective vehicle for implementing a bunching strategy. That’s because a client can make a single, larger contribution to the donor-advised fund, generally claim the charitable deduction in the year of the contribution under Internal Revenue Code Section 170(a), and then recommend grants to favorite charities now and in future years. In short, the timing of the income tax deduction is separated from the timing of charitable distributions, allowing the client’s favorite nonprofits to continue receiving consistent annual support.
Get Ahead of Year-End Deadlines
As year-end approaches, many clients will naturally ask whether they should “bunch,” or accelerate, charitable gifts before December 31. Advisors who raise the bunching conversation now and coordinate early with the TFEC’s Philanthropy Team can help clients evaluate whether this strategy aligns with both their philanthropic objectives and their broader financial plans, then implement it without rushing.
Other Year-End Charitable Giving Strategies
Bunching is not the only technique to be aware of well before year-end! Here are two additional important reminders for your client conversations:
- Remember that charitable planning opportunities are typically even more attractive when appreciated securities are involved. Under Internal Revenue Code Section 170(e)(1)(A), a client who contributes long-term appreciated publicly traded securities to a public charity, including a donor-advised or other type of fund at TFEC, generally may deduct the property’s fair market value (subject to the applicable adjusted gross income limitations) while avoiding recognition of the built-in capital gain that otherwise would result from a sale. This is usually a much better tax outcome than giving cash.
- Note that Qualified Charitable Distributions (QCDs) allow IRA owners age 70 ½ or older to give directly to charity tax-free, up to the 2026 annual limit of $111,000, even before required minimum distributions begin, potentially lowering adjusted gross income and reducing taxes on Social Security benefits and Medicare premiums. For some of your clients, this matters given the charitable deduction limitations under the One Big Beautiful Bill Act.
Start the Charitable Planning Conversation Now
Bunching is only one charitable planning strategy to consider before year-end. Depending on a client’s circumstances, gifts of appreciated assets or Qualified Charitable Distributions may also offer tax advantages while helping clients support the causes that matter to them.
Starting these conversations now gives advisors and clients time to review the options and put a thoughtful plan in place. TFEC’s Philanthropy Team works alongside attorneys, CPAs and financial advisors to help structure charitable gifts in ways that support each client’s philanthropic goals and financial plans.
For assistance with year-end charitable planning, contact TFEC’s Philanthropy Team at philanthropy@tfec.org.
