--- title: "The Bunching Breakthrough: How a Donor-Advised Fund Unlocked $24,672 in Hidden Tax Savings | Sage Street Wealth" description: Most charitable givers receive zero tax benefit — and don't know it. See how one couple unlocked $24,672 in tax savings from the same giving they were already doing. --- [Skip to content](https://www.sagestreetwealth.com/daf-bunching-strategy-case-study#main-content) [![2](https://www.sagestreetwealth.com/hs-fs/hubfs/2.png?width=5859&height=1953&name=2.png)Homepage](https://www.sagestreetwealth.com?hsLang=en) - About - [Our Story](https://www.sagestreetwealth.com/our-story?hsLang=en) - [Our Process](https://www.sagestreetwealth.com/our-process?hsLang=en) - Resources - [Client Login](https://app.rightcapital.com/account/login?cobrand=QHzXn7AoFGjGcJfbHvw2Ag&type=client) - [Financial Planning Articles](https://www.sagestreetwealth.com/journal?hsLang=en) - [FAQ](https://www.sagestreetwealth.com/frequently-asked-questions?hsLang=en) [Work with Us](https://www.sagestreetwealth.com/work-with-sage-street?hsLang=en) - About - [Our Story](https://www.sagestreetwealth.com/our-story?hsLang=en) - [Our Process](https://www.sagestreetwealth.com/our-process?hsLang=en) - Resources - [Client Login](https://app.rightcapital.com/account/login?cobrand=QHzXn7AoFGjGcJfbHvw2Ag&type=client) - [Financial Planning Articles](https://www.sagestreetwealth.com/journal?hsLang=en) - [FAQ](https://www.sagestreetwealth.com/frequently-asked-questions?hsLang=en) [Work with Us](https://www.sagestreetwealth.com/work-with-sage-street?hsLang=en) Case Study · Charitable Giving Strategy # How a Charitable Giving Strategy Unlocked $70k+ in Tax Savings They were giving $10,000 a year to charity and receiving zero tax benefit for it. Here's how one structural change fixed 30 years of missed deductions in a single move. [See If This Applies to You →](https://meetings-na2.hubspot.com/evan-hammond/tax-efficiency-audit) The Problem ## First, a Quick Lesson on How Deductions Actually Work   When you file your federal tax return, you have two options: take the standard deduction or itemize. The standard deduction is a flat amount the IRS lets every taxpayer subtract from their income, no questions asked. For 2026, that number is $32,200 for a married couple filing jointly. You don't need receipts, documentation, or a single qualifying expense. It's automatic. Itemizing means adding up your actual deductible expenses and deducting that total instead. The main items that count: mortgage interest, state and local taxes (SALT), and charitable contributions. You only itemize if your actual deductions exceed the standard deduction. Otherwise, the standard deduction wins by default — and your individual expenses, including every dollar you donated to charity, produce no additional tax benefit whatsoever. Since 2018, when the Tax Cuts and Jobs Act nearly doubled the standard deduction, the share of taxpayers who itemize has fallen to roughly 10%. For the other 90%, charitable giving is invisible to the IRS — not because they aren't generous, but because the math doesn't add up. **That's the trap.** And most people don't know they're in it. ### The Challenge: $300,000 in Giving, $0 in Deductions Our clients are a married couple in their early 60s with $100,000 in household income. They own their home outright — no mortgage, no mortgage interest deduction. They pay state and local taxes totaling $10,000, which was also the cap under the 2018 tax law. And every year, they give $10,000 to a mix of organizations they care about: their church, a local food bank, a scholarship fund. Their total itemized deductions: $10,000 in SALT plus $10,000 in charitable giving — $20,000 in total. The standard deduction for a married couple filing jointly: $32,200. They fell short by $12,200. Every year, they took the standard deduction. Every year, their $10,000 in charitable giving produced zero additional tax benefit. $20K Annual Itemized Deductions $32.2K Standard Deduction (2026) $0 Tax Benefit from Giving Extend that out across a 30-year retirement. At $10,000 per year, they were on pace to give $300,000 to charity. At a 24% tax rate, properly structured deductions on that giving could be worth tens of thousands of dollars in tax savings. Instead, they were on track to capture exactly $0 of it. That's not a small oversight. That's a structural problem — one that required a structural fix. ### A Note on SALT: What Changed and Why It Still Matters Under the 2018 tax law, SALT deductions were capped at $10,000. For this couple, that cap was the ceiling — and it kept their total deductions well below the standard deduction threshold year after year. The One Big Beautiful Bill Act raised the SALT cap to $40,000 for 2025 and $40,400 for 2026 for households earning under $500,000. That's meaningful relief for filers in high-tax states. But the expanded cap reverts to $10,000 in 2030, making this a temporary window rather than a permanent fix. For this couple, whose SALT liability sits at $10,000 regardless, the change doesn't move the needle much either way. The underlying problem remains. The Solution ## The Solution: Front-Load the Giving, Capture the Deduction   The answer wasn't to change what they gave or who they gave it to. It was to change the structure and timing. We opened a donor-advised fund and recommended they make a single lump-sum contribution of $100,000 from their taxable brokerage account — roughly 8 to 10 years of charitable giving, funded at once. Here's what that contribution did immediately: Immediate deduction in contribution year (60% of $100,000 AGI) $60,000 Remaining carryforward for up to five years $40,000 Year one itemized deductions (SALT + DAF) — more than double the standard deduction $70,000 Funds inside the DAF invested and growing Tax-free Their giving pattern didn't change at all. Their church still gets its annual gift. So does the food bank and the scholarship fund. The difference is that the money no longer comes out of their cash flow year by year — it's already set aside in the DAF, growing, waiting to be directed. The contribution is irrevocable — the money is committed to charity — but they direct grants to their chosen organizations on their own schedule, exactly as before. The Result ## The Result: What the Numbers Actually Look Like   Before the strategy, their $20,000 in total deductions fell below the standard deduction threshold. Their charitable giving produced no tax benefit. After the DAF contribution, their year one itemized deductions totaled $70,000 — $37,800 above the standard deduction. At their 24% rate, that excess generates $9,072 in immediate federal tax savings in year one alone. The $40,000 carryforward deduction, applied over the following years, produces another $9,600 in federal tax savings. Federal tax savings — year one (24% × $37,800 excess) $9,072 Federal tax savings — $40,000 carryforward deduction $9,600 Total tax savings from one $100,000 DAF contribution $18,672 Capital gains tax avoided on $40,000 in appreciated stock (15%) $6,000 Combined tax and capital gains savings from a single contribution $24,672 ### One Additional Benefit: No Capital Gains Tax The $100,000 came from their brokerage account, which held appreciated stock with roughly $40,000 in embedded gains. By contributing the shares directly to the DAF rather than selling them first, they avoided long-term capital gains tax on that growth entirely. At a 15% rate, that's another $6,000 they didn't pay to the IRS. ### The Long Game: Rinse and Repeat This isn't a one-time move. Every 8 to 10 years — once the DAF balance has been distributed to their charities — they make another lump-sum contribution, reset the cycle, and capture another round of deductions and capital gains savings. Over a 30-year retirement, that's three cycles of the same strategy, each one generating comparable savings. 3× Cycles Over 30-Year Retirement $300K Same Charitable Giving Planned $74,016 Cumulative Savings ### An Unexpected Bonus: The Contribution Year Opens Other Doors In the year they contribute to the DAF, their taxable income drops to $30,000 — well below where it normally sits. That creates two opportunities worth noting: **Roth conversion:** With income temporarily lower, converting a portion of their traditional IRA to a Roth at a reduced rate makes sense. They can fill up lower tax brackets at a cost they'd never otherwise have access to. **Harvesting gains in the brokerage account:** Lower income may place them in the 0% capital gains bracket, meaning they can realize appreciation in their portfolio with no federal tax owed. The DAF contribution doesn't just save taxes on giving. It restructures the entire year's tax picture in ways that extend the benefit well beyond the charitable deduction itself. Is This Right for You? ## When This Strategy Does — and Doesn't — Make Sense   Charitable bunching through a DAF is worth a serious look if: #### Good Fit If You... - ✓Give consistently to charity and plan to continue doing so - ✓Own your home outright or carry a small mortgage - ✓Have assets in a taxable brokerage account, ideally with appreciated positions - ✓Are in a meaningful tax bracket — 22% or higher — where deductions produce real savings - ✓Have the financial flexibility to front-load multiple years of giving #### Probably Not the Right Fit If You... - ×Don't give consistently, or your giving is spontaneous rather than planned - ×Are already itemizing comfortably — this strategy solves a problem you don't have - ×Have savings primarily in retirement accounts — pulling from an IRA to fund a DAF largely cancels the deduction - ×Are in a low tax bracket where deductions produce minimal savings One final note: DAFs are flexible in what they accept. Cash and appreciated securities are the most common contributions, but private business interests, real estate, and other non-cash assets can often be contributed as well. If you have a complex asset base, that flexibility may open additional planning options worth exploring. ### For Retirees Taking RMDs: A Different Tool If you're over 70½ and taking Required Minimum Distributions, a Qualified Charitable Distribution may serve you better than a DAF. A QCD lets you transfer up to $111,000 per year directly from your IRA to charity, satisfying your RMD while keeping the distribution out of your taxable income entirely — no itemizing required. Different situation, different tool, same goal. Tax Efficiency Audit ## Are you leaving tax savings on the table? If you give to charity and take the standard deduction every year, there's a real chance your generosity isn't producing the tax benefit it could. A Tax Efficiency Audit looks at your full picture — income, assets, deductions, and giving history — to find out whether a bunching strategy or another approach applies to you. It's a focused, no-obligation conversation. If there's an opportunity, we'll find it. [Request Your Tax Efficiency Audit →](https://meetings-na2.hubspot.com/evan-hammond/tax-efficiency-audit) No cost. No obligation. Just an honest look at your situation. Investment advisory services offered through CreativeOne Wealth, LLC, a Registered Investment Adviser. Sage Street Wealth and CreativeOne Wealth are unaffiliated entities. This case study is for illustrative purposes only and does not represent the results of any specific client. Individual results will vary based on personal circumstances. This content is not intended as tax or legal advice. Please consult a qualified tax professional regarding your specific situation. 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