‘Tis the season … to be generous, of course, with the bonus of tax efficiency. As the sun sets on 2025, now is the perfect time for financial advisors to instigate conversations with clients about charitable giving. But this is no rinse and repeat exercise; the landscape of giving is changing, driven by a raging bull market and impending tax legislation.
Under the One Big Beautiful Bill Act, charitable deductions will face new limitations beginning in 2026. These modifications, building on provisions from the 2017 Tax Cuts and Jobs Act, will affect which giving strategies deliver the greatest tax efficiency. Advisors, of course, should be on hand to guide clients through the implications and risks.
The strong equity markets throughout 2025 have also created an exceptional window for donor conversations. As portfolios have reached new peaks, the opportunity to deploy appreciated securities toward charitable goals has become increasingly compelling. Furthermore, clients sitting on concentrated positions or facing liquidity events should be particularly attentive to bundling charitable contributions into this year rather than waiting for 2026, when the tax benefits will diminish.
This is noteworthy for clients about to retire. Anne Marie Stonich, chief client experience officer at Coldstream Wealth Management, believes the most critical year for charitable tax planning is an individual’s last year of full employment because it is typically their highest earning year.
“Using 2025 as an example, a taxpayer can save 37% in federal taxes, plus state taxes,” Stonich said. “Starting in 2026, because of changes from the One Big Beautiful Bill, taxpayers will be limited to a maximum benefit of 35%. If a client is facing a large liquidity event in 2026, such as selling a business or diversifying a large block of concentrated stock with capital gains, they should consider their charitable giving goals this year.”
Donor-advised funds have emerged as the primary vehicle through which affluent households are organizing their giving. These accounts offer flexibility that traditional approaches lack. Funds can be invested across multiple asset classes and grow tax-free over time, allowing a single contribution to generate decade-spanning charitable support. The mechanics appeal to investors who want to separate the investment of assets from the decision of which causes deserve their support.
Recent data reveals the scope of this transformation. According to one major platform CHECK serving the advisory community, donors granted nearly $8.9 billion to charitable organizations in fiscal year 2025, exceeding the previous year by more than 34%. This surge reflects not merely increased generosity but a more deliberate approach to philanthropy. For every dollar contributed to such accounts, an average of 12 separate grants flow to charities, indicating that donors are becoming more intentional and thoughtful about distribution than in years past.
Beyond the mechanics and tax implications, advisors are discovering that charitable planning functions as an entry point into deeper client relationships. Conversations about giving naturally evolve into discussions about family values, intergenerational wealth transfer, and personal legacy. These dialogues frequently extend beyond the primary client to include children and grandchildren, creating opportunities to shape how the next generation approaches money and values.
Evan Welch, private wealth advisor at BridgePort Financial Solutions, says there are several reasons why a DAF is often a good fit for clients, most notably the immediate tax deduction in the year securities or cash are contributed to the DAF, up to 60% of adjusted gross income (AGI) for cash and 30% for appreciated securities with a 5-year carryforward available.
“Not surprisingly, many clients fund DAFs in years when they have high incomes, sell a business, or other major event,” Welch said.
Whether clients are giving more strategically or reactively this year, Welch says he is not seeing any difference versus other years.
“When clients’ portfolios are doing well - think the wealth effect - they tend to be more inclined to give away money to charitable giving vehicles. The biggest motivators to donate we typically see are somewhat reactive, such as a child dying from a disease or a hospital saving the life of a loved one,” Welch said.
Year-end checks or cash donations, while generous, represent the least tax-efficient methods of supporting causes. Once clients understand how structured giving vehicles can simultaneously increase charitable impact and improve their financial outcomes, they rarely revert to traditional approaches. This educational component has become a competitive differentiator for advisory firms seeking to distinguish themselves in a crowded marketplace.
The demographic composition of donors also continues to expand. While religious and educational causes have traditionally dominated philanthropic giving, recent evidence shows donors support more than 150,000 distinct charities across a spectrum of causes far broader than historical patterns. This diversification suggests that advisors should resist making assumptions about client priorities and instead invest time in learning what causes genuinely move their clients.
Non-cash contributions are also gaining traction. Appreciated securities, real estate, and even cryptocurrency are flowing into charitable vehicles at accelerating rates. These assets often deliver superior tax outcomes compared to donating cash, and advisors who master the mechanics of deploying concentrated portfolios toward charitable aims can deliver substantial value.
As 2025 draws to a close, the convergence of favorable markets, willing donors, and tax changes that will soon limit certain deductions creates a rare moment. Advisors who seize this opportunity to deepen philanthropic conversations and position clients optimally for transition into 2026 will strengthen client bonds while helping generate meaningful community impact.
Julie Sunwoo, president of DAFgiving360, said: "This is an excellent conversation starter, not only with the direct client but also with their children and grandchildren. Advisors are always looking to connect with the next generation ahead of the coming wealth transfer. Asking about values and causes that matter to the family is a powerful place to begin.”
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