Financial advisors are in end-of-year planning mode as clients seek to shut the books on 2025. And considering the market’s strong performance year-to-date, that should include opening their hearts and wallets a little wider to charity as well.
For their part, advisors say all that philanthropic planning will be keeping them busy this giving season, especially on the donor-advised fund (DAF) front.
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.
Additionally, the money grows tax-free in the DAF and can be invested in a variety of assets. The DAF can also be used to support multiple charities over time, and assuming the DAF benefits from strong investment returns, the original investment can provide annual donations to charities for decades.
As far as 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.
Samuel Diarbakerly, founder & private wealth advisor at Generation Capital Advisors, says most clients give reactively when they first start working with him, usually writing checks at year-end or donating cash, which is actually the least efficient way to give. They don’t realize that donating appreciated stock or funding a DAF can be dramatically more effective.
“A big part of our role is education. We help clients move from ad-hoc giving to a more proactive structure. We set up the right vehicles, teach them how to evaluate charities more thoughtfully, and create a simple framework so they can be intentional about who they support. Once they see how much more efficient structured giving is, financially and emotionally, they rarely go back to the old way,” Diarbakerly said.
While a bull market may boost donations, 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, primarily because it is typically their highest earning year.
“Using 2025 as an example, a taxpayer can save 37% in federal taxes, plus state taxes. 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,” Stonich said.
Similarly, Rory O’Hara, founder and senior managing partner of Ausperity Private Wealth, a partner firm of Sanctuary Wealth, says he is guiding high-income clients to give strategically this year, particularly by bundling charitable contributions into 2025.
Added O’Hara: “Philanthropy invites deeply personal conversations that go beyond asset allocation, it connects financial planning to purpose. When clients see us aligning tax strategies with their values and legacy goals, it elevates the relationship from transactional to truly transformational.”
Diarbakerly notes that conversations concerning philanthropy quickly get more personal in terms of what matters to them, what they want their kids to learn, and the legacy they want to build.
“It strengthens the relationship because it goes far beyond the portfolio,” Diarbakerly said.
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