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Donor-Advised Fund Strategies For 2026
With highly appreciated, concentrated stocks, these funds offer donors more options and tax advantages. By Michael T. Meltzer
DONOR-ADVISED FUNDS HAVE BEEN AROUND FOR nearly 100 years. But they are likely to truly demonstrate their usefulness these days, when the stock market has seen unprecedented growth.
Why? Because the recent gangbusters growth in the S & P 500 and Dow Jones Industrial Average, especially the surge of“ Magnificent 7” tech companies and other key players in the build-out of AI infrastructure, has left many investors with overconcentrated positions. Those investors are facing huge capital gains taxes if they decide to lock in their appreciation or trim positions.
This is where a donor-advised fund can show its value. By contributing a portion of their long-term appreciated stocks to these charitable vehicles, investors can not only reduce their risk of having too much in one security but also reduce their tax burden.
Say an investor has an extreme overweight in one security. If they do, they can pursue a strategy of simultaneously selling a stock while also donating stock, which gives them a tax-neutral result.
The One Big Beautiful Bill
After years of strong stock market performance, many clients at the end of 2025“ super-funded” their donor-advised funds, hoping to take advantage of tax benefits that would be lost with the One Big Beautiful Bill Act, whose provisions took effect this year. Specifically, the law created a floor of 0.5 % on adjusted gross income for charitable deductions starting in 2026.
Under the new tax regime, imagine that a client’ s adjusted gross income is $ 1 million and they donate $ 25,000 to charity( including a donor-advised fund). The first 0.5 % of the AGI( or $ 5,000 in this case) would not be tax-deductible, so the tax deduction is
18 | FINANCIAL ADVISOR MAGAZINE | JULY / AUGUST 2026 WWW. FA-MAG. COM