November 20, 2018
Donor Bundling with a Donor-Advised Fund

With the tax reforms implemented earlier this year raising the standard deduction to $12,000/year for individuals and $24,000/year for couples, here’s a creative idea to reach the itemized charitable deduction threshold: Donor Bundling through a Donor-Advised Fund in the Paso del Norte Community Foundation.

Donor-Advised Funds (DAFs) are popular charitable giving funds that allow donors to make larger, tax-deductible contributions in a single year and then recommend grants to the charitable organizations of the donors’ choice over multiple years. Donors can achieve this by “bundling” multiple years of charitable giving into a single tax year and, if given to a Donor-Advised Fund, granting over multiple years.

Consider this illustration: You are a couple with $10,000 in deductions and $14,000 in charitable gifts, equal to the new standard deduction.  In this scenario, you do not receive an incremental deduction for your $14,000 in charitable gifts.  However, if you were to bundle two years of giving into a single tax year by donating $28,000 into a DAF, you would have $38,000 of itemized deductions, including the additional $14,000 in deductions in your tax bill, a tax savings of over $5,100 for donors in the higher tax bracket. You can request that the DAF gift the $28,000 over two years to support the charitable organizations of your choice.  

If you’re interested in exploring these or other end-of-year gift opportunities, call us at 915-218-2644.