Charitable Bunching
Charitable Bunching
A tax efficient strategy that uses a Donor-Advised Fund to reduce taxable income, while leaving clients with more money to support causes they care about over time.
A tax efficient strategy that uses a Donor-Advised Fund to reduce taxable income, while leaving clients with more money to support causes they care about over time.
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How it Works
How it Works
Charitable bunching is a strategy that separates the timing of the tax deduction from the timing of when donations are made.
Charitable bunching is a strategy that separates the timing of the tax deduction from the timing of when donations are made.
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1
Combine Donations
Consolidate multiple years of planned
giving into one large gift to your
Donor-Advised Fund.
2
Capture a Larger Deduction
Use the single large contribution in year
one to exceed the standard deduction
threshold and maximize your itemized
deductions for that tax year.
3
Give Over Time
Continue supporting your favorite
charities from the Donor-Advised Fund,
while taking the standard deduction
going forward.
When is Charitable Bunching
a Good Fit?
01
Consistent Giving
For donors who engage in charitable giving every year.
02
Large Income Events
When Donors received a large amount of one-off taxable income in a given year.
CASE STUDY
Without Charitable Bunching
Without Charitable Bunching
A married couple donates $12,000 per year to several different charities. They itemize their taxes each year, accounting for $12,000 in annual donations.
Years 1-5 Without Charitable Bunching
Donations
$12,000
State and Local Taxes
+$12,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$32,000
Standard Deductible
-$31,500
Additional Deduction
=$500
Total Donations Over 5 Years
Total Donations Over 5 Years
$60,000
$60,000
Total Tax Deduction Over 5 Years
Total Tax Deduction Over 5 Years
$160,000
$160,000
CASE STUDY
With Charitable Bunching
With Charitable Bunching
A married couple donates $12,000 per year to several different charities. Using charitable bunching, they contribute 5x their annual donations in year 1 to their Donor-Advised Fund, generating a larger tax deduction.
Year 1 With Charitable Bunching
Donations
$60,000
State and Local Taxes
+$12,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$80,000
Standard Deductible
-$31,500
Additional Deduction
=$48,500
Years 2-5 With Charitable Bunching
Standard Deduction
$31,500
Years 2-5 Tax Deduction
$126,000
Total Donations Over 5 Years
Total Donations Over 5 Years
$60,000
$60,000
Tax Deduction Over 5 Years
Tax Deduction Over 5 Years
$206,000
$206,000
CASE STUDY
With Charitable Bunching
A married couple donates $10,000 per year to several different charities. With charitable bunching, the donor is going to contribute $50,000 in year 1 to their DAF. Each year they will grant $10,000 to the causes they support.
CASE STUDY
Years 1 With Charitable Bunching
Donation
$50,000
State and Local Taxes
+$10,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$68,000
Standard Deductible
-$27,700
Additional Deduction
=$40,300
The donor can then claim the standard tax deduction for years 2-5.
Years 2-5 With Charitable Bunching
Donation
$27,700
State and Local Taxes
$110,000
Total donations over 5 years: $50,000
Total tax deduction over 5 years: $178,000
Without Charitable Bunching
A married couple donates $10,000 per year to several different charities. The couple itemizes their taxes each year, using their $10,000 yearly donation to add to their deduction.
Years 1-5 Without Charitable Bunching
Donation
$10,000
State and Local Taxes
+$10,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$28,000
Standard Deductible
-$27,700
Additional Deduction
=$300
Total donations over 5 years: $50,000
Total tax deduction over 5 years: $140,000
CASE STUDY
01
Consistent Giving
When Donors consistently engage in charitable giving every year.
02
One-Off Income
When Donors received a large amount of one-off taxable income in a given year.
Charitable
Bunching
A tax efficient strategy that leverages DAFs to reduce taxable income while leaving clients with more money to support causes they care about.
When is Charitable Bunching
a Good Fit?
USE CASES
01
Consistent Giving
When Donors consistently engage in charitable giving every year.
02
One-Off Income
When Donors received a large amount of one-off taxable income in a given year.
How it Works
OUR PROCESS
Enjoy customizable lists, team work tools, and smart tracking all in one place. Set tasks, get reminders, and see your progress simply and quickly.
When is Charitable
Bunching a Good Fit?
USE CASES
1
Front-Load
Contributions
Front-loads multiple years-
worth of charitable
contributions to a DAF in
a single year.
2
Itemized
Deductions
Claim an itemized deduction,
capitalizing on the larger
charitable contribution.
3
Distribute
Funds
Distribute money to charity
overtime while claiming the
standard deduction in
subsequent years.
1
Front-Load Contributions
Front-loads multiple years-worth of
charitable contributions to a DAF in
a single year.
2
Itemized Deductions
Claim an itemized deduction,
capitalizing on the larger charitable
contribution.
3
Distribute Funds
Distribute money to charity over
time while claiming the standard
deduction in subsequent years.