Charitable Giving Strategy: Bunching Donations

by | | Other Cool Stuff, Taxes


A lot of people think they’re getting a tax benefit from their charitable donations. Under current tax law, many of them aren’t! Bunching multiple years of planned donations into one tax year can solve this problem.

Why many people get no tax benefit from donations

The federal standard deduction is $12,950 for single filers and $25,900 married filing jointly (2022). Everyone gets this deduction, even if they donate $0.

To get a tax benefit from your donations, your itemized deductions must exceed the standard deduction. This can be hard to do, especially if you’re married.

The most common itemized deductions are:

  • State and local taxes (capped at $10K). Working ER docs will always hit the cap, so the rest of this article assumes you hit it.
  • Mortgage interest.
  • Charitable donations.


Single filers only need $2,950 of interest + donations to exceed the $12,950 standard deduction. If you have a mortgage, you likely have at least $2,950 of interest. In that case, you get a tax benefit for every dollar you donate.


If you’re married, you need $15,900 of interest + donations to exceed the $25,900 standard deduction. This is harder to do.

For example, if you have $10K interest, your first $5,900 of donations give you no tax benefit because they just get you up to the standard deduction you would have gotten anyway!

Solution: Bunching donations

To get more tax benefit from your donations, consider bunching a few years of planned donations into one tax year.

  • Year 1 = Two years worth of donations. Itemized deductions exceed standard deduction, giving you more tax benefit.
  • Year 2 = No/minimal donations. Take standard deduction.

Example: over $5K of tax savings

Below, we show how a married couple who donates $15K/year saves $5,640 in taxes over a two-year period (!).

*Assumes federal + state marginal tax rate of 40%. $14,100 additional deduction x 40% = $5,640 tax savings.

Donor-advised fund as a tool for bunching

You can bunch donations simply by giving 2x to your favorite charity in Year 1 and nothing in Year 2. However, this creates two potential issues:

  • The charity’s cash flow is less predictable, so they have a harder time planning.
  • If you give 2x in Year 1, will the charity be surprised in Year 2 when you don’t give?

Enter a donor-advised fund (DAF). A DAF is a charitable account owned by a 501(c)(3) nonprofit whose whole purpose is to make DAFs available.

You get a tax deduction when you contribute to your DAF. Then, you make grants from the DAF to charities you support. You can wait as long as you want after you contribute, before you make grants.

In this way, DAFs separate the timing between when you get a tax deduction, and when you actually send the money to charity. This makes DAFs ideal for bunching!

For example, say our married couple who gives $15K/year wants their charity to have predictable cash flow. They contribute $30K up front to a DAF, and set up a recurring grant of $1,250/month to their charity. Our couple gets the benefit of bunching, and the charity gets monthly cash flow even in years where the couple donates nothing and takes the standard deduction.

Donor-advised funds are a powerful tool!  Check out our article on 5 benefits of a DAF.

Helping charities is the most important thing, but maximizing your tax benefit is the icing on the cake! Consider bunching as part of your overall giving strategy.

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