Key Takeaways
- Ownership: DAF assets belong to the sponsoring charity, not the donor, and that one fact explains nearly every restriction on how a DAF can be used.
- Donor benefit: Grants that produce more than an incidental benefit to the donor are prohibited, which rules out pledges, gala tickets, auction items, and memberships with a non-deductible component.
- QCDs: A qualified charitable distribution (QCD) from an IRA cannot be directed to a DAF under current law.
- 2026 changes: Beginning in 2026, DAF contributions are subject to a 0.5% AGI floor, and donors in the top bracket see the value of the deduction capped at 35%.
A donor-advised fund (DAF) can make grants to qualified public charities for charitable purposes, and very little else. Donor-advised fund rules prohibit using a DAF to fulfill a personal pledge, buy event tickets or auction items, pay for most memberships, grant to a private non-operating foundation, or reimburse expenses. An IRA qualified charitable distribution can’t fund a DAF either, and 2026 tax law changes reduce the deduction for many DAF contributions.
What are the rules for a donor-advised fund?
A contribution to a DAF is an irrevocable gift to a sponsoring organization, typically a national sponsor or community foundation. The sponsor takes legal ownership and control of the assets. The donor keeps advisory privileges, meaning the donor can recommend how the account is invested and which charities receive grants, but the sponsor approves every grant.
That structure is why the contribution is deductible when it’s made. It’s also the source of every restriction that follows. Because the gift is already complete, the assets can’t later be used for anything that benefits the donor personally or that falls outside a charitable purpose.
Using a DAF to fulfill a charitable pledge
Many donors don’t realize that DAF assets aren’t owned or controlled by the donor. A pledge is a personal commitment, and once assets move into a DAF they belong to the sponsor. Using sponsor-owned assets to satisfy that commitment would give the donor a benefit the rules don’t permit, so a DAF grant can’t be used to fulfill a personal pledge.
I’ve had conversations with clients who were surprised to learn this distinction, particularly when they had already made a commitment to support a nonprofit. From their perspective, using the DAF to fulfill that commitment seems like a natural extension of their charitable giving. But because the pledge is a personal obligation, the grant cannot be used to satisfy it.
The common alternative is to communicate gift intent to the charity through a non-binding verbal agreement rather than a formal pledge.
Event tickets, auction items, and memberships
DAF contributions are tax-deductible when they’re made, so DAF grants can’t result in a benefit to the donor afterward. A key chain, mug, or other item of minimal value may be allowed. Larger goods or services, such as meals and merchandise, are prohibited.
In practice, that means a DAF can’t be used to purchase admission to charitable events like galas and golf tournaments, or to buy raffle tickets or auction items. Memberships follow the same logic. A DAF cannot pay for a museum or professional association membership if any part of the fee is not tax-deductible.
I’ve also seen this come up when clients want to use their DAF to support an organization through an annual fundraising event. While the charitable intent is clear, the distinction is whether the donor receives something of value in return. A client can certainly recommend a grant to support the organization’s mission, but would need to purchase their own event ticket or auction item separately.
How a DAF can fund a scholarship
DAF grants can support scholarship programs, including general scholarship funds, named scholarships, and scholarships with specific awarding criteria.
Grants cannot be made directly to individuals. They must be made to, and awarded through, a public charity. In addition, neither the donor nor any member of the donor’s family can hold a majority or deciding vote in selecting the scholarship recipient.
DAF grants to private foundations
The rules here run in one direction. DAFs can receive grants from private foundations, but DAF grants cannot be made to private non-operating foundations, the type that primarily funds other charities rather than running programs of its own.
Private operating foundations are treated differently. These foundations actively run their own charitable programs, and under certain circumstances donors can recommend DAF grants to them.
Reimbursement and compensation from a DAF
DAFs cannot be used to reimburse expenses or provide compensation, even if the expenses were in support of a charitable purpose or event.
Since DAF contributions are tax-deductible, all grants must be made to a qualified nonprofit for charitable purposes. A payment to an individual for costs or services doesn’t meet that standard.
Can a QCD go to a donor-advised fund?
No. A qualified charitable distribution (QCD) is a direct transfer from an IRA to a charity, available to IRA owners age 70½ and older. A QCD is excluded from taxable income and can count toward a required minimum distribution (RMD). For 2026, the annual QCD limit is $111,000, up from $108,000 in 2025 and indexed for inflation.¹
A DAF is not an eligible QCD recipient. Under current law, a QCD cannot be directed to a donor-advised fund.² Bipartisan legislation to change this has been introduced but has not passed.³
For donors using QCDs to satisfy RMDs, the distinction matters. A transfer from an IRA to a DAF is not a QCD, so the amount is treated as a taxable IRA distribution rather than excluded from income. Donors who want to use both tools can direct QCDs to operating charities and fund the DAF with other assets, such as appreciated securities held more than one year.
How the 2026 tax law changes affect DAF contributions
Several changes to the charitable deduction took effect in the 2026 tax year. They fall hardest on itemizing, higher-income donors, the same group most likely to use a DAF.⁴
| Provision | 2026 rule | Effect of DAF contributions |
| AGI floor | Itemized charitable contributions are deductible only to the extent they exceed 0.5% of AGI | On a $400,000 AGI, the first $2,000 of giving produces no deduction |
| Top-bracket cap | For donors in the 37% bracket, the value of the charitable deduction is capped at 35% | Each deducted dollar reduces tax by 35 cents rather than 37 |
| Non-itemizer deduction | New deduction for non-itemizers of $1,000 (single) or $2,000 (married) | Does not apply; limited to direct cash gifts to operating charities |
| Cash gift ceiling | 60% of AGI for cash gifts to public charities, including DAFs, now permanent | Applies to cash contributions to a DAF |
| Appreciated non-cash assets | 30% of AGI for assets held more than one year, with a five-year carryforward⁵ | Unchanged |
The floor works like a deductible on charitable giving. The first 0.5% of AGI in contributions each year produces no tax benefit. Only giving above that threshold is deductible.
These changes make bunching more valuable than it was. Bunching means concentrating several years of planned giving into a single high-income year, often through one large DAF contribution. The donor then recommends grants from the DAF over the following years.
The floor applies once per tax year. A single large contribution clears it once, while the same giving spread across several years runs into it every year. Consider a donor who itemizes and has $400,000 of AGI in each year:
- Giving $10,000 annually for five years leaves $10,000 of total giving nondeductible under the floor.
- A single $50,000 contribution in one year leaves $2,000 nondeductible.
Whether bunching makes sense depends on several factors:
- How income varies from year to year.
- Whether the donor itemizes in the years between contributions.
- Which assets would be contributed, since cash and appreciated securities fall under different AGI ceilings.
Modeling the size and timing of a bunched contribution against several years of projected income is the kind of analysis a wealth management advisor can run before assets are committed to a DAF.
Frequently Asked Questions
Who owns the money in a donor-advised fund?
The sponsoring charity owns the assets in a donor-advised fund once a contribution is made. The donor keeps advisory privileges to recommend investments and grants, but the sponsor has final control.
Can a DAF be used to pay a charitable pledge?
No. Using DAF assets to satisfy a personal pledge would give the donor a prohibited benefit, so donors typically express gift intent through a non-binding verbal agreement instead.
Can you buy charity gala or auction tickets with a DAF?
No. Gala admission, raffle tickets, and auction items provide more than an incidental benefit to the donor, so donor-advised fund rules prohibit paying for them with DAF grants.
Can a QCD go to a donor-advised fund?
No. Under current law, a qualified charitable distribution from an IRA cannot be directed to a donor-advised fund, although bipartisan legislation to allow it has been introduced.
Is there a minimum distribution requirement for donor-advised funds?
No. Federal law does not require donor-advised funds to distribute a minimum amount each year, though the absence of a payout requirement is the subject of an ongoing policy debate.
Citations
- “Qualified charitable distribution (QCD),” Fidelity, accessed October 2026, https://www.fidelity.com/retirement-ira/required-minimum-distributions-qcds
- “QCDs and DAFs: A Practical Guide for Donors and Advisors,” National Philanthropic Trust, April 9, 2026, https://www.nptrust.org/philanthropic-resources/philanthropist/qcds-and-dafs-a-practical-guide-for-donors-and-advisors/
- Citation: 26 U.S.C. § 408(d)(8)(B)(i) (Internal Revenue Code Section 408(d)(8)(B)(i))”Charitable deduction guide for 2026 taxes,” Vanguard Charitable, accessed October 2026, https://www.vanguardcharitable.org/charitable-tax-deductions
- “Appreciated assets: Which should you donate and when does it make the most sense?” Vanguard Charitable, October 9, 2026, https://www.vanguardcharitable.org/blog/appreciated-assets-which-should-you-donate-and-when-does-it-make-most-sense
Disclaimers
This article was originally written in April 2025 and most recently revised for accuracy as of August 2026. The opinions and analyses expressed in this newsletter are based on Curi Capital, LLC’s (“Curi Capital”) research and professional experience are expressed as of the date of our mailing of this newsletter. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi makes no warranty or representation, express or implied, nor does Curi accept any liability, with respect to the information and data set forth herein, and Curi specifically disclaims any duty to update any of the information and data contained in this newsletter. The information and data in this newsletter does not constitute legal, tax, accounting, investment or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account.
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