Site Search

Your donor advised fund (DAF) is still one of the most tax-efficient giving tools available. The new rules don't change that—they make strategic use of your fund more important.

The New 0.5% Floor for Charitable Deductions

If you itemize, only charitable contributions above 0.5% of your Adjusted Gross Income (AGI) are now deductible. On a $300,000 AGI, the first $1,500 in gifts produces no deduction.

DAF implication: Bundle giving into high-income years—a business sale, stock vesting, or large bonus—rather than spreading modest contributions across years. A single larger contribution to your DAF clears the floor efficiently, generates the deduction in the year you contribute, and lets you grant to nonprofits on your own schedule.

The New Non-Itemizer Deduction

Standard deduction filers can now deduct up to $1,000 in cash gifts ($2,000 married filing jointly) as an above-the-line deduction. Contributions to DAFs do not qualify—only direct cash gifts to public charities. If you're a non-itemizer wanting this benefit, give directly to a qualifying nonprofit or add to an existing endowment fund at the Rhode Island Foundation.

Qualified Charitable Distributions (Age 70½+)

Beginning in 2026, the annual limit for Qualified Charitable Distributions (QCD) is $111,000 per individual, indexed for inflation under the SECURE 2.0 Act. Each spouse with their own IRA may make a QCD up to this amount, allowing married couples to transfer as much as $222,000 directly to charity in a single tax year. To qualify, the distribution must be made directly from a traditional IRA to an eligible public charity and occur after the donor reaches age 70½. QCDs are excluded from income entirely—bypassing the AGI floor and working even for standard-deduction filers. They also count toward Required Minimum Distributions.

QCDs cannot be directed to a DAF. Use them for direct gifts to qualifying charities including other endowment funds at the Rhode Island Foundation. Use your DAF for appreciated assets, larger strategic gifts, and grants you want to time on your own schedule. They complement each other well.

A one-time QCD of up to $55,000 (2026 limit) can also establish a Charitable Gift Annuity.

Bottom Line

The AGI floor rewards concentration over small annual gifts. For DAF holders, the strategy is straightforward: contribute in high-income years, grant over time, and use appreciated assets when possible to avoid capital gains and maximize deductions. For donors 70½+, use QCDs to compliment your DAF grants.

Reach out to our Development team or your financial advisor to discuss your specific situation.

Information contained in this piece is for the general education and knowledge of our readers. It is not designed to be a substitute for professional tax or legal advice.