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Donor-advised fund: giving appreciated stock under the 2026 rules

A donor-advised fund lets you deduct a gift this year and grant it to charities later. Here are the 2026 rules for giving stock, the limits and the downsides.

Vishant Mehta, CPA, Ex-Big 4

Published

  • donor-advised fund
  • charitable deduction
  • appreciated stock
  • high earners
  • year-end planning

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A donor-advised fund is an account at a public charity, called a sponsoring organization, that you fund now and recommend grants from later. You deduct the gift in the year you put it into the fund, even if charities receive the money years later.

The best asset to give is stock you have held more than one year. You deduct its full market value and never pay tax on the gain. From 2026, the first 0.5% of your AGI in gifts is not deductible. In the 37% bracket, a deduction now saves at most 35 cents per dollar. Shares must reach the fund by December 31, 2026 to count for this year.

What it isA charity account you advise on
Deduction yearThe year you fund it
Cash limit60% of AGI
Stock limit30% of AGI, at market value
Unused deductionCarries forward 5 years
New floorFirst 0.5% of AGI is not deductible
37% bracketSaves at most 35 cents per dollar
Status on October 13, 2026Both limits apply from 2026

How much of a donor-advised fund is tax-deductible?

All of what you put into the fund is deductible in the year you give it, if you itemize and stay within the AGI limits. The grants the fund later makes to charities are not deducted again.

  • Cash. You can deduct cash up to 60% of your AGI.
  • Stock held more than one year. You deduct its market value, up to 30% of your AGI.
  • Stock held one year or less. Your deduction is limited to what you paid for it.
  • The 0.5% floor. From 2026, gifts count only above 0.5% of your AGI. At $400,000 of AGI, the first $2,000 is not deductible.
  • The 35% cap. If you are in the 37% bracket, each dollar of itemized deductions now saves at most 35 cents.
  • Carryover. A gift above the limits carries forward for the next five years.

Why give appreciated stock instead of cash?

Giving appreciated stock avoids the tax on its gain and still earns a deduction for its full value. Take a single filer with $400,000 of AGI who gives shares worth $50,000, bought for $10,000.

StepAmount
Market value of the shares$50,000
Gain never taxed$40,000
Tax avoided at 15% plus 3.8%$7,520
Deduction after the 0.5% floor$48,000
Tax saved in the 35% bracket$16,800

Selling first would cost $7,520 of federal tax and leave $42,480 to give. Giving the shares puts the full $50,000 in the fund. The $16,800 assumes you already itemize and your income stays in the 35% bracket.

What is the downside to a donor-advised fund?

The main downside is that the gift is final: the sponsor owns the money, and you can only recommend where it goes. These are the rules that catch donors.

  1. You cannot take it back. The sponsor must have exclusive legal control of what you give, and you keep only advisory privileges.
  2. Grants go to charities, not people. A grant to an individual is a taxable distribution for the sponsor.
  3. No benefit can come back to you. If a grant gives you more than an incidental benefit, you owe a tax of 125% of that benefit.
  4. No IRA transfers. A qualified charitable distribution from an IRA cannot go to a donor-advised fund.
  5. No deduction without itemizing. The new 2026 deduction for non-itemizers, $1,000 or $2,000 on a joint return, excludes gifts to these funds.
  6. No set payout. The tax code sets no yearly payout for these funds, unlike the 5% rule for private foundations. Your sponsor may set its own activity rules and fees.

How do I report a donor-advised fund on my tax return?

You report your gift to the fund as an itemized deduction on Schedule A of Form 1040. You never report the grants it makes later. On the 2025 Schedule A, cash goes on line 11, other property on line 12 and any carryover on line 13.

If your gifts of property total more than $500, attach Form 8283. Publicly traded stock goes in Section A at any amount, with no appraisal. Before you file, get the sponsor's written acknowledgment for each gift. For a donor-advised fund, it must say the sponsor has exclusive legal control of the assets.

When does timing change the deduction?

A gift counts in the year the fund receives it, so the dates below matter.

DateWhat happens
January 1, 2026The floor and 35% cap begin
Early December 2026Ask your broker to move shares
December 31, 2026Last day for a 2026 gift
Before you fileGet the fund's written receipt
April 15, 2027Your 2026 return is due
2027 to 2031Unused deduction carries forward

Shares you hand to your own broker to transfer count only when they reach the fund. A transfer asked for in late December can finish in January and count for 2027.

What should you do now?

  • Give the lots with the largest gains that you have held more than one year. Name them by specific identification.
  • Never give shares worth less than you paid. Sell them, deduct the loss and give the cash.
  • Use the cash you would have given to buy the same shares back. The wash sale rule applies only to losses, so the new shares simply carry today's higher cost basis.
  • If you take the standard deduction most years, put several years of giving into the fund in one year. In the other years, give up to $1,000, or $2,000 joint, in cash straight to charities.
  • Expect to lose the first 0.5% of AGI in each year you give. It carries forward only in a year your gifts also pass an AGI limit, so fewer, larger gift years lose less.

For planning around a large sale or bonus year, see our tax planning for high earners.

Sources.