Standard Deduction Planning: Maximize Your Giving With A Brooklyn Org DAF

Brooklyn Org’s Donor Services team is always on the pulse of pending changes in tax laws and charitable giving strategies, ensuring that our donors stay informed and equipped to make the most impactful decisions.

One of many items on our legislative “watch list,” especially in light of the upcoming elections, is the standard deduction. Without intervening legislation, in 2026 the standard deduction for individual taxpayers younger than age 65 is scheduled to drop from $14,600 to $8,300.

While this may spell higher taxes for some taxpayers, the news could be positive for charitable giving. You’ll recall that the Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. As a result, only 9% of taxpayers itemized deductions in 2020 compared with 31% in 2017. Although certainly not the only factor motivating charitable giving, tax incentives do play a role in donors’ decision-making about whether, when, and how much to give. Indeed, statistics recently released by the National Bureau of Economic Research indicated that the increased standard deduction resulted in $20 billion fewer charitable donations in 2018 alone.

Brooklyn Org is happy to work with you and your tax advisors to map out a charitable giving plan for the next few years to navigate anticipated changes in the law. For example, this year you could consider using a technique called “bunching” to make two years’ worth of gifts up front to your Donor Advised Fund to take advantage of the standard deduction while it’s still high.

If you determine that bunching is right for you, naturally, cash is easy to give in a year of higher-than-expected income. So for example, if you earn a large bonus this year, get a big increase in compensation, take a job buyout, or experience a significant liquidity event, your surplus income could make bunching ideal for your charitable giving.

However, most often donating highly-appreciated marketable securities is a better choice than giving cash —whether or not you use a bunching strategy — because it is extremely tax efficient. Stock given to a public charity, such as your Donor Advised or other type of fund at Brooklyn Org, typically is deductible at the asset’s fair market value. In turn, Brooklyn Org would pay no capital gains tax on the sale of the asset, which would generate more dollars to support your philanthropic interests than if you had sold the stock yourself and then given the proceeds to your fund.

You can think outside of the box too, and explore other assets that make great gifts to your fund. As i with gifts of other long-term appreciated assets, a gift of real estate or closely-held stock avoids capital gains taxes and results in more money for your favorite causes than if you had sold the asset, taken the tax hit, and then donated the proceeds to your DAF.

The bottom line?  Now is the perfect time to look ahead at your charitable giving plans so that you don’t leave dollars behind. Your own financial situation, as well as the charities you support, will benefit from your careful planning. Brooklyn Org is here to help, and available to meet with you to plan your giving, whether you already have a fund with BKO or are interested in opening a new fund with us.