Bunching Donations

Did you know...

BUNCHING CHARITABLE GIFTS using a donor-advised fund allows you to maximize your deductions under the recent tax law change, while still supporting the causes and organizations that are important to you.

Bunching charitable gifts is a way for you to support causes you care about and reduce your tax bill at the same time. By bunching, you may get a tax break if you are close to the standard deduction on your federal taxes.

How Does It Work?

The 2018 tax law increased the standard deduction for singles and joint filers younger than age 65, while capping or eliminating other deductions. These changes mean that it no longer makes sense for many people to itemize their deductions. Bunching enables you to itemize anyway.

Instead of giving directly to causes you support every year, you take two or more years of charitable deductions in a single year and put the money in a donor-advised fund before year-end.

What Are the Benefits?

Giving to a donor-advised fund in one large "bunch" increases your total deductions. When added to your other deductible expenses, you will end up with enough deductions to itemize for that year.

After you give to your donor-advised fund, you may skip giving the next year or two and revert to taking the standard deduction on your federal taxes. Instead of giving directly to the causes you support every year, you direct money from your donor-advised fund to these organizations. Giving to a donor-advised fund in one large “bunch” increases your total deductions. When added to your other deductible expenses, you will end up with enough deductions to itemize for that year.

• By depositing multiple years’ worth of donations into a donor-advised fund at the Jewish Community Foundation of the Jewish Federation of Greater Pittsburgh, you can deduct the entire contribution in the year you make it, while maintaining the flexibility to make distributions from the fund in future years.
• You can continue to give annual contributions to the charities that mean the most to you, without interruption.
• Using a donor-advised fund, you can give to both Jewish causes, such as Jewish agencies or synagogues, and non-Jewish causes, such as arts organizations, secular social services or educational institutions.
• The Foundation continues to invest the money in your donor-advised fund, so the value may grow over time.
• Donor-advised funds make it easy to involve generations of your family in philanthropy. You can appoint your children as advisors or successors to the fund.