Wealthy Americans have increasingly turned to Donor-Advised Funds (DAFs) as a strategy to manage their tax obligations and facilitate charitable giving, particularly following changes in recent tax legislation. Providers of these funds reported a significant surge in their adoption at the close of 2025, a trend that has continued into 2026.

This increased interest is largely driven by provisions in a tax law passed in mid-2025, which introduced limitations on charitable giving deductions for high earners and those who itemize. Many donors also sought to leverage DAFs to contribute highly appreciated assets, such as stocks that have seen substantial growth over the past decade and a half, thereby avoiding capital gains taxes while securing an immediate income tax deduction. Funds held within a DAF can be invested tax-free, with distributions to charities occurring over an extended period.

The new tax rules, which became effective this year, established a floor for charitable deductions, making donations below 0.5% of adjusted gross income non-deductible for itemizers. Additionally, the legislation capped the tax benefit of itemized deductions for individuals in the highest income bracket at 35%, down from 37%.

Financial advisers have recommended DAFs to clients, including law-firm partners, hedge-fund managers, and private-equity executives, as a means to mitigate the impact of these changes. Scott DeSantis, CEO of Boston-based Civic Financial, stated that his firm opened dozens of new DAFs for clients and more than doubled its DAF-related assets under management between the law's passage and the end of 2025. For example, a person planning to donate $10,000 annually for four years, earning $1 million, might have seen $5,000 of their 2026 donation become non-deductible. By contributing the full $40,000 to a DAF at the end of 2025, they could claim the entire deduction, with the DAF distributing funds over subsequent years, potentially saving $5,000 to $7,400 federally over the four-year period, according to certified public accountant Miklos Ringbauer.

Even for those who did not establish a DAF last year, advisers note the funds remain useful for "bunching" multiple years of donations into a single tax year, helping them clear the new 0.5% deduction floor. Vanguard Charitable reported an unusual rise in new account openings in 2026.

DAF providers witnessed substantial growth in late 2025. National Philanthropic Trust, a major provider, saw more than 3,700 new accounts opened in November and December 2025, a 123% increase year-over-year. Vanguard Charitable experienced a 99% increase with almost 2,600 new accounts in the same period. Contributions to accounts at DAFgiving360, formerly Schwab Charitable, climbed roughly 50% year-over-year in the fourth quarter.

As of 2024, there were 3.56 million DAFs holding $326 billion in assets. Data from the Donor Advised Fund Research Collaborative indicates that approximately 25% of total DAF assets at the end of 2023 were granted to charities in 2024.

However, DAFs face criticism because, unlike private foundations which are required to distribute at least 5% of their assets annually, DAFs have no federally mandated payout requirements. Critics argue this allows donors to "park" money and that providers, who earn asset-management fees, may have little incentive to encourage immediate giving. Some providers are working to encourage distributions; for instance, Regenerative Social Finance, based in San Francisco, waives fees on DAF investments directed toward its impact fund, which lends to nonprofits and businesses.