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.
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 Deduction
-$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.
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 Deduction
-$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 $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.
CASE STUDY
Years 1 With Charitable Bunching
Donation
$60,000
State and Local Taxes
+$12,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$80,000
Standard Deduction
-$31,500
Additional Deduction
=$48,500
The donor can then claim the standard tax deduction for years 2-5.
Years 2-5 With Charitable Bunching
Donation
$31,500
State and Local Taxes
$126,000
Total donations over 5 years: $60,000
Total tax deduction over 5 years: $206,000
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
Donation
$12,000
State and Local Taxes
+$12,000
Mortgage Interest
+$8,000
Total Yearly Itemized Deduction
=$32,000
Standard Deduction
-$31,500
Additional Deduction
=$500
Total donations over 5 years: $60,000
Total tax deduction over 5 years: $160,000
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
Charitable bunching is a strategy that separates the timing of the tax deduction from the timing of when donations are made.
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.