As 2026 approaches, one thing is becoming clear: charitable giving is about to get more complicated. The Opportunity for Better Budgeting and Balanced Accountability Act (OBBBA) ushers in a series of tax-related shifts beginning January 1, 2026.
While Congress intends these changes to create uniformity and reduce loopholes, the reality is many taxpayers will lose access to several tax advantages they’ve enjoyed for nearly a decade. For individuals who give to charity or plan to support causes over time, 2025 is a strategic year.
One of the potentially most effective moves you may want to make before the calendar hits December 31, 2025, is to establish and fund a Donor-Advised Fund (DAF).
Here is why this matters, what a DAF does, and how you can position yourself ahead of these changes while there’s still time.
1. What’s Changing in 2026 Under OBBBA?
While the full set of changes is complex, here are the three most important shifts affecting everyday taxpayers and philanthropic families:
- The higher standard deduction sunsets. Since 2018, most Americans haven't itemized their deductions because the standard deduction was so high. In 2026, it drops back to pre-2018 levels. When itemizing becomes more attractive, charitable deductions become potentially more valuable. But the rules around when and how you can deduct contributions are also tightening.
- Certain charitable deduction strategies become more restrictive. OBBBA narrows the ability to “bunch” large deductions in a single tax year without clearer substantiation and timing.
- Higher-income households face new phase-outs. Several deductions — including charitable ones—will be subject to reintroduced income limits.
2. Why a Donor-Advised Fund Is the Smartest Move Before the Deadline
A Donor-Advised Fund (DAF) is essentially a low-cost, highly flexible charitable account. You make contributions now, take the deduction in the year of the gift, and recommend grants to nonprofits later—on your schedule.
Funding a DAF in 2025 is powerful because it lets you lock in today’s rules before the 2026 reset.
Key Benefits of Opening and Funding a DAF by 12/31/25
- You secure a deduction under the 2025 rules. Even if you plan to give to nonprofits gradually over future years, the deduction is taken upfront—before OBBBA’s limitations kick in.
- You can "bunch" several years of giving in a way that may not be allowed, or may be capped, after 2025. This means you may be able to contribute (as an example) five years’ worth of charitable giving into a DAF in 2025, claim the full deduction now, and distribute gifts at your usual pace.
- You maximize tax efficiency in what may be one of the last high-deduction years for a while. You retain total flexibility.
Once funded, your DAF:
- can be invested for potential growth,
- allows you to give over months or decades,
- can involve children, grandchildren, or successors,
- avoids the administrative burden of private foundations.
3. Who Benefits Most?
Anyone can use a DAF, but OBBBA’s upcoming changes may especially impact:
- High-income households Facing reintroduced deduction phase-outs in 2026.
- People with major income events in 2025 (large bonuses, business sale, real estate sale, exercised stock options, etc.)
- Philanthropic families who want a structured, long-term giving plan
- Individuals who already support multiple charities annually A DAF simplifies the entire process while locking in 2025 tax benefits.
4. What You Can Do Right Now
Here’s the practical, no-nonsense checklist:
- Decide whether you want to itemize in 2025.
If yes, a DAF can amplify your deduction. - Estimate the charitable amount you want to pre-fund.
Think: one year, three years, or even longer. - Contribute appreciated stock, real estate, or other assets.
This lets you avoid capital gains and take the deduction at fair market value. - Open the account well before December 31.
You don’t want to be scrambling at year-end. - Grant on your own timeline.
Give immediately or spread giving across multiple years—your choice.
5. Bottom Line
OBBBA isn’t about discouraging generosity — it’s about tightening the rules. But for taxpayers, families, and philanthropists, the message is simple: 2025 is a decisive year.
By opening and funding a Donor-Advised Fund before December 31, 2025, you lock in today’s more favorable deduction rules while building a flexible, long-term giving platform for the causes you care about.
It’s the rare combination of doing good and doing something potentially financially smart—before the window narrows.
Sources include: “One Big Beautiful Bill (OBBB): Impact on charitable giving” , Fidelity Charitable, and “What the One Big Beautiful Bill Act means for charitable giving.” DAFgiving360.