Quick overview

Bunching charitable gifts is a simple but powerful move: give more in one year, give less (or nothing) in nearby years, and itemize only in years when your itemized deductions—primarily the larger charitable outlay—exceed the standard deduction. This strategy keeps your philanthropy steady over time while aiming to increase the tax value of those gifts in high-deduction years.

This article explains how bunching works, when it makes sense, recordkeeping and deduction limits you must mind, and practical tools (like donor-advised funds) professional planners often use to implement the plan.

(For IRS rules and qualification details, see the IRS guidance on charitable contributions.)[https://www.irs.gov/credits-deductions/individuals/charitable-contributions]

Why bunching matters now

The Tax Cuts and Jobs Act (TCJA) increased the standard deduction and reduced the number of taxpayers who itemize. For people who regularly give but usually fall below the standard deduction threshold, bunching is a way to recover the tax benefit of charitable giving without permanently changing how much you give.

In my practice, clients near the standard deduction threshold frequently get the biggest benefit. A household that normally gives at a level just under the standard deduction can double the tax value of their giving by concentrating donations every two or three years.

Step-by-step: How to plan a bunching strategy

  1. Gather baseline numbers: total expected charitable gifts, mortgage interest, medical expenses (if applicable), state and local taxes, and other itemizable expenses for the coming years.
  2. Run a multi-year projection: compare itemizing vs taking the standard deduction each year across a 2–5 year window. This shows whether bunching produces meaningful tax savings.
  3. Decide a cadence: common patterns are two-year, three-year, or front-loading giving in the highest-income year of a cycle.
  4. Choose a vehicle: pay charities directly in the bunching year or fund a donor-advised fund (DAF) to claim the deduction now and distribute grants over time.
  5. Keep records and receipts: maintain contemporaneous acknowledgments for all gifts and track DAF contributions and grants.
  6. Revisit annually: tax rules, income, and life changes can shift whether bunching still makes sense.

How donor-advised funds fit in (and linked resources)

A donor-advised fund (DAF) is a commonly used tool to bunch gifts. By contributing cash or appreciated securities to a DAF, you get an immediate tax deduction for the year of the contribution while recommending grants to charities in future years. That makes DAFs a practical way to preserve your desired giving pattern while realizing a tax benefit in a concentrated year.

If you want a deeper DAF primer or a how-to timeline, FinHelp has practical guides: Donor-Advised Funds: Pros, Cons, and Use Cases and a step-by-step Bunching Donations with Donor-Advised Funds: Year-by-Year Guide.

Tax rules and limits to watch

  • Qualified organizations only: Gifts must be to IRS-qualified charities to be deductible. Keep written acknowledgments for contributions of $250 or more (IRS rule). (IRS source)[https://www.irs.gov/credits-deductions/individuals/charitable-contributions]
  • AGI limits: General deduction limits depend on the type of gift and recipient. For example, cash gifts to public charities are generally deductible up to a portion of your adjusted gross income (AGI). Gifts that exceed the limit can often be carried forward for up to five years, subject to the same limits when claimed. Check the IRS page for current percentage limits before planning.
  • Non-cash gifts: Donating appreciated securities or property can yield special tax benefits (deduction for fair market value and avoidance of capital gains tax), but valuation and substantiation rules are stricter.
  • State tax considerations: Some states have different rules for charitable deductions and may not follow federal treatment. Confirm state-specific rules before locking in a plan.

Note: IRS rules and percentage limits can change. Rely on the current IRS guidance when you finalize any tax plan (see IRS charitable contributions page linked above).

Practical examples (illustrative)

Example A — Two-year bunching for a single filer (illustrative numbers):

  • Typical annual giving: $8,000
  • Standard deduction (hypothetical figure for illustration only): if the standard deduction is about $14,000, a single filer would not itemize with $8,000 in gifts.
  • Bunching: contribute $24,000 in Year 1, and $0 in Year 2. In Year 1, you would likely exceed the standard deduction and itemize. In Year 2 you take the standard deduction.

Example B — Using appreciated stock to bunch:

  • Donate appreciated stock with a $30,000 market value to a DAF in a single year. You may receive a charitable deduction for the fair market value (subject to limits) and avoid capital gains tax on the appreciation, while distributing grants from the DAF later.

These are examples only. Run the precise math on your tax return or with a tax pro before donating.

Documentation and recordkeeping

  • Cash gifts under $250: record bank records, credit card statements, or payroll deduction slips that show the charity name, date, and amount.
  • Gifts of $250 or more: obtain a contemporaneous written acknowledgment from the charity stating the amount and whether you received goods or services in return (required by the IRS).
  • Non-cash gifts: keep a description of the property, how you acquired it, the date, and any appraisal(s) required by the IRS for higher-value items.
  • DAF contributions: retain the DAF account statements showing your contribution and any grants recommended from the DAF to charities.

Good recordkeeping makes an IRS audit or deduction review far less stressful.

Common mistakes and how to avoid them

  • Assuming every payment qualifies: Don’t assume recurring event tickets, membership fees, or payments for goods are fully deductible—only the portion that’s a charitable contribution is deductible.
  • Forgetting the substantiation requirements: Missing written acknowledgments can disallow otherwise valid deductions.
  • Over-bunching and liquidity strain: Only bunch when you can afford to accelerate multiple years of giving without harming your emergency savings or retirement funding.
  • Ignoring carryforward rules: If your donation exceeds AGI limits, you may be able to carry excess deductions forward; track and claim them properly.

When bunching is NOT worth it

  • If your itemized deductions other than charitable giving already exceed the standard deduction, bunching may add complexity with little incremental benefit.
  • If bunching forces you to delay retirement saving or emergency fund contributions, the long-term trade-offs may not be worth the near-term tax savings.

Tax planning calendar (practical timing tips)

  • Year-end review (Oct–Dec): Run the bunching calculation by late Q3 or early Q4 to decide whether to accelerate donations before year-end.
  • High-income years: Consider bunching into a year where your income and marginal tax rate are higher; the deduction is often more valuable then.
  • Charitable asset gifts (stocks): Transfer appreciated securities early in the year to give time for DAF setup and to document the gift.

Frequently asked questions (short answers)

Q: Can I bunch gifts every year?
A: You can implement a regular multi-year cadence (e.g., every other year or every three years), but you should model whether it still produces tax savings after fees, lost investment return, and lifestyle impacts.

Q: Are donor-advised funds the only option?
A: No. You can make direct gifts to charities or use other vehicles (e.g., charitable remainder trusts) depending on your long-term goals. DAFs are popular because they are flexible and administratively simple.

Q: How long can I carry forward excess deductions?
A: Under current federal rules, excess charitable deductions may be carried forward for up to five years. Confirm current IRS guidance because rules and limits can change.

Professional perspective

In my practice advising mid- and high-net-worth clients, a structured bunching plan combined with a DAF often produces both philanthropic and tax-planning wins: immediate tax deduction in a targeted year, ongoing grantmaking flexibility, and simplified recordkeeping. However, I always stress liquidity and retirement funding first. Bunching should be a coordinated decision within a broader financial plan—not an isolated tax trick.

Bottom line

Bunching charitable gifts can restore the tax value of philanthropy for taxpayers who normally fall below the standard deduction threshold. When done thoughtfully—with attention to AGI limits, substantiation rules, state tax differences, and your overall financial plan—bunching can increase the after-tax impact of your giving while preserving your preferred philanthropic cadence.

Sources and further reading

Professional disclaimer: This content is educational and does not replace personalized tax or financial advice. Consult a CPA or CFP about your specific circumstances before changing your giving or tax strategy.