Most charitable giving and tax planning get squeezed into the busy final months of the year. But waiting until December means missing out on smarter financial moves that could be made much earlier, during the summer, or throughout the year.
Summer often brings big life moments that change both a client’s personal world and financial picture. They might be selling a business or a home, stepping into retirement, sending a child off to college, or navigating the ups and downs of the market. These moments can be stressful, and in some cases, they come with capital gains or other tax considerations.
Because these changes don’t wait until the end of the year, it’s helpful to stay proactive with tax planning and charitable giving strategies.
Donor-advised funds, or DAFs, help clients manage big financial changes and provide the opportunity to make a bigger impact on the charitable causes they care about most. Still, some advisors haven’t discussed DAFs with their clients yet, missing out on a potentially valuable opportunity to better address their needs and deepen those relationships.
DAFs allow clients to contribute appreciated assets like cash, stocks, real estate, or business interests to a charitable cause and receive a tax deduction based on the fair market value. This strategy can help reduce taxable income and lower capital gains exposure. While many clients wait until December, there are real advantages to spreading out DAF contributions over the year. Taking a year-round approach gives clients the flexibility to adjust their contributions as their priorities evolve.
The assets inside a DAF can be invested to grow tax-free, while locking in tax savings earlier. And since most DAF providers handle the paperwork, advisors and clients can focus on their overall financial picture.
A total of over 2,000 small businesses changed hands in Q1 alone, representing an enterprise value of $2 billion. And each year, roughly 40% of home sales happen between May and August, making summer and Q2 a peak season for residential real estate.
Mid-year can be an opportune time to review potential capital gains and take steps to manage tax exposure. Your clients can donate appreciated real estate or business interests directly to a DAF before selling instead of donating cash after the sale. Non-cash contributions generally can be deducted up to 30% of AGI, with a five-year carry-forward. Non-cash gifts like real estate take time to process, so starting earlier helps avoid last-minute stress.
In the weeks leading up to the 2024 April tax deadline, investors pulled $160 billion from cash equivalent funds and $4.1 billion from U.S. equities, according to a Bank of America report citing EPFR data. These outflows suggest investors may have been reshuffling portfolios to meet tax liabilities.
Donor-advised funds offer a smart solution.
Clients can donate appreciated securities directly to a DAF, offsetting capital gains tax while claiming a deduction based on fair market value. Beyond tax benefits, this strategy also lets clients rebalance portfolios without triggering a tax liability.
Looking ahead, an estimated $124 trillion is expected to transfer between generations by 2048, with nearly $18 trillion projected to go to charities.
Starting DAF conversations now gives families time and a structure to create a meaningful legacy. It also allows advisors to connect more deeply with multiple generations, helping ensure the values behind the wealth are passed along with the assets.
Here are three key areas advisors can discuss with clients to help them discover how DAFs can add value to both their portfolios and their lives.
Look at recent or upcoming capital gains from real estate, business sales, or portfolio activity.
Identify appreciated assets, both liquid and illiquid, that could be used for a donor-advised fund.
Consider funding a DAF to ease tax burdens, maximize deductions, and potentially grow charitable capital tax-free.
By acting now, clients can be intentional, take control of their tax planning, and create a lasting impact with their wealth.
8181391.1 | 07/2025 | 07/31/2027