Bunching: A Simple Strategy to Maximize Your Charitable Deduction'

In recent years, the standard deduction has climbed significantly. When it comes to charitable giving, this means fewer people itemize and many donors unknowingly lose out on potential tax benefits, even when their generosity stays the same.

This creates an opportunity for a strategy called bunching. It’s simple, powerful, and especially easy to use with Daffodil.

What is “bunching”?

“Bunching” means grouping multiple years of charitable donations into a single tax year. This unlocks a larger deduction and you can still plan your giving strategically.

What happens if you don’t bunch?

If your deductions fall below the standard deduction each year, you simply claim the standard deduction. Your charitable gifts are still meaningful, but they may not provide any additional tax benefit.

What happens if you do bunch?

Imagine you normally give $10,000 every year to nonprofits you care about.

Instead of donating $10,000 in 2024 and again in 2025, you could have contributed $20,000 in 2024 to a donor-advised fund. (Click here for a review of DAF basics.)

In this scenario:

• 2024: Your deductions (including the $20,000 contribution) exceeded the standard deduction, so you itemized.

• 2025: You take the standard deduction.

Even with no other changes, a household in this situation could end up with at least $3,800 more in total deductions over two years.

Why a DAF makes bunching easier

A donor-advised fund (DAF) is especially helpful because:

• You receive the full deduction in the year you contribute

• You can still support nonprofits on your usual schedule grants from your DAF

• You can fund your DAF with cash or other assets, choosing what’s most tax-efficient

When bunching + a DAF is a tax-smart strategy

Below are scenarios where bunching is not just helpful, it’s a genuine tax-planning tool that supports thoughtful giving.

1. Donating appreciated securities

Donating appreciated securities is one of the most effective strategies available to everyday donors. When you contribute long-term appreciated assets to a DAF:

• You avoid capital gains tax on the appreciation

• You receive a fair market value deduction (generally up to 30% of AGI)

• You can fund multiple years of future giving all at once

For donors with concentrated stock positions, this can be an elegant way to diversify and give more efficiently.

2. High Income Years

If your income spikes (think of situations like RSU vesting, sale of a business, or other milestone events), part of your income may be taxed at a higher marginal rate. Bunching in a high-income year can:

• Increase the value of your deduction

• Offset some of the spike in taxable income

• Front-load several years of future giving at a time it’s most beneficial

3. Households near the itemization threshold

Many households don’t realize they’re just under the standard deduction without even trying. For 2025, the married filing jointly standard deduction is $31,500. Dual income homeowners often reach $25,000–$30,000 in deductions quickly through mortgage interest, state/local taxes, and even modest annual charitable giving. When you add a bunched charitable contribution, that’s when the household may surpass the standard deduction, allowing them to itemize—unlocking more value from the generosity they already planned to give.

This is one of the most common situations where bunching makes a meaningful difference.

A simple way to think about it

Bunch multiple years of giving → contribute cash or appreciated assets → deduct more in the optimal year → give consistently through your DAF

It’s a strategy that benefits donors and nonprofits.

Ready to put this strategy to work? Join us on Daffodil and start planning how to give smarter.

A quick reminder

This article is educational and not tax or legal advice. Please consult a qualified tax professional to evaluate your personal situation.