How QCDs and Donor-Advised Funds Can Work Together

If giving back is part of who you are, there's a good chance you're already writing checks to causes you care about. But if you're giving from your income rather than your assets, you may be leaving real tax savings on the table, and missing chances to make your generosity go further.

Two of the most useful tools in tax-smart charitable giving are the Qualified Charitable Distribution (QCD) and the Donor-Advised Fund (DAF). They work differently, they serve different purposes, and for many people the right answer is to use both. Here's what you need to know heading into the rest of 2026.

Why Charitable Giving Strategy Matters More in 2026

Tax law changes for 2026 raised the standard deduction to $16,100 for single filers and $32,200 for married couples filing jointly. That's good news for simplifying your taxes, but it also means fewer people benefit from itemizing charitable deductions the old-fashioned way. On top of that, 2026 introduced a new 0.5% of AGI floor on itemized charitable deductions, along with a cap for higher earners, both of which can quietly shrink the tax benefit of a straightforward cash gift.

None of this means giving less. It means being more intentional about how you give. That's where QCDs and DAFs come in.

What Is a Qualified Charitable Distribution (QCD)?

A QCD lets you send money directly from your IRA to a qualified 501(c)(3) charity, without that money ever counting as taxable income to you.

Who qualifies:

• You must be age 70½ or older at the time of the transfer
• The funds must come from a Traditional, Rollover, or Inherited IRA (not a 401(k), 403(b), or active SEP)
• The money has to move directly from the IRA custodian to the charity; it can't pass through your hands first

The 2026 limits:

• Up to $111,000 per individual, or $222,000 for a married couple where both spouses have IRAs and both are 70½ or older
• A one-time QCD of up to $55,000 can also fund a charitable remainder trust or charitable gift annuity

Why it's powerful: A QCD can satisfy some or all of your Required Minimum Distribution (RMD) for the year, but the amount never touches your Adjusted Gross Income (AGI). That matters well beyond your tax bracket. A lower AGI can mean less of your Social Security is taxable, a lower Medicare IRMAA surcharge, and more breathing room under the net investment income tax threshold. Because it's an exclusion from income rather than a deduction, a QCD helps you even if you take the standard deduction and never itemize at all.

The one thing a QCD can't do: it cannot go to a donor-advised fund, a private foundation, or a supporting organization. It has to go straight to an operating public charity.

What Is a Donor-Advised Fund (DAF)?

A DAF is a giving account you open through a sponsoring organization. You contribute cash, appreciated stock, or other assets, take an immediate tax deduction in the year you contribute (if you itemize), and then recommend grants out to your favorite charities on your own timeline, this year, next year, or over many years.

Why people use DAFs:

• Bunching deductions. If your itemized deductions are close to the standard deduction threshold, contributing several years' worth of giving into a DAF in one year can push you over the line to itemize, then you take the standard deduction in the leaner years.
• Gifting appreciated assets. Donating long-held stock or funds directly to a DAF lets you avoid capital gains tax on the appreciation while still deducting the full fair market value.
• Flexibility and legacy. You can involve family members as advisors, teach the next generation about giving, and take your time deciding which organizations to support.
• No age requirement. Unlike a QCD, a DAF is available at any age, funded from any account, not just an IRA.

QCD vs. DAF: The Key Differences

Using Both Together: A Common Approach

Many of the families and executives I work with end up using both tools, just for different purposes and different seasons of life.

Before age 70½, appreciated stock or a bonus year might go into a DAF, capturing a deduction while values are high, and grants go out over time as causes come up. Once QCDs become available at 70½, the IRA becomes the first stop for annual giving, since it's the most tax-efficient dollar to give away. The DAF then becomes the vehicle for larger, appreciated-asset gifts or for years when you want to front-load several years of giving into one deduction.

The order matters. If you're 70½ or older and charitably inclined, a QCD is generally the most efficient dollar you can give, before you reach for cash, before you reach for the DAF. Save the DAF for the assets and situations a QCD can't reach.

A Few Things to Keep in Mind

• The QCD deadline is December 31 of the tax year you want it to count for, and IRA custodians can take a few weeks to process the transfer, so don't wait until the last week of December.
• Keep the paperwork. Your IRA custodian typically won't flag a QCD separately on your 1099-R, so you'll want a receipt from the charity and clear records for your tax preparer.
• A QCD reduces the tax basis available for future RMDs, so it's worth reviewing how QCDs interact with your broader retirement income plan, especially if you're also managing Roth conversions or IRMAA thresholds.
• DAF contributions are irrevocable. Once the money is in the fund, it's committed to charitable purposes, even though you retain advisory privileges over where it goes.

Where to Go From Here

Charitable giving works best when it's built into your broader financial plan, not treated as an afterthought each December. Whether that means directing this year's RMD straight to the causes you love through a QCD, funding a donor-advised fund with appreciated stock, or coordinating both, the right structure depends on your income, your assets, and what you're hoping your giving accomplishes.

If you'd like to talk through what makes sense for your situation, reach out to our team at team@planningforgood.co or 877-568-7526. We'd love to help you give in a way that reflects both your values and your financial picture.

This article is for general educational purposes and isn't personalized tax or investment advice. Please consult your tax advisor about your specific situation. Planning for Good, LLC is a hybrid practice under Cambridge Investment Research.