Author: Pledge 1%
With Congress’s recent passage of what’s being informally called the “Big Beautiful Bill”(H.R.1)— a piece of legislation that reshapes corporate tax policy and charitable giving incentives — CSR and corporate philanthropy leaders are reevaluating how to meet their social impact goals without compromising financial efficiency.
One powerful tool rising to the top of the strategic toolkit is the Donor-Advised Fund (DAF). Already well known among larger corporate philanthropy teams, DAFs offer companies a compliant and flexible way to give — while also navigating around new limitations introduced by the bill.
What’s in the “Big Beautiful Bill”—and Why It Matters
While we won’t go into details here, three key implications of the bill for corporate giving:
- Tighter caps on charitable deductions for both individual and corporate donors. Starting in 2026, corporations will only be entitled to deduct charitable contributions that exceed 1% of their taxable income. Many large corporations may not have taxable income, but if you have taxable income, this will apply.
- Stricter timelines and reporting requirements for private foundations and direct giving programs
- Reduced flexibility for multi-year commitments, grant carryovers, and general operating support
In short, the legislation could make it harder for corporations to maintain consistent, flexible funding for the nonprofits they support—unless the companies adjust their approach.
Enter the Donor-Advised Fund (DAF)
A Donor-Advised Fund (DAF) allows a corporation to make a charitable contribution to a sponsoring organization (see a list of providers at the end of this article), receive an immediate tax deduction, and then recommend grants to nonprofits from that fund over time.
Key benefits:
- Immediate deduction: Contribute now, deduct now—even if grants are made later.
- Strategic timing: Decouple the timing of your tax planning from your giving cycles.
- Administrative ease: Simplify recordkeeping and avoid complex foundation reporting.
- Increased flexibility: Respond more quickly to urgent needs or changing CSR priorities.
3 Strategic Ways to Use a DAF Under the New Legislation
- Pre-Fund Future Giving
If deduction caps are expected to tighten further, front-load your CSR contributions into a DAF during favorable tax years. This secures the deduction now while giving your team time to allocate funds thoughtfully in the years ahead.
- Simplify Compliance
Private foundations and direct corporate grant programs may face more oversight or reduced flexibility under the new bill. A DAF offers a streamlined, lower-maintenance alternative that still allows your company to remain an engaged and intentional giver—without increasing compliance burdens.
- Enhance Agility and Responsiveness
A DAF empowers CSR teams to act quickly when crises arise—natural disasters, humanitarian needs, or emerging community challenges—without needing to wait for the next budget cycle or tax window. You already have pre-allocated, pre-approved funds ready to go.
Using a DAF to ensure impact dollars for the long term
Using a DAF responsibly demonstrates fiscal prudence and a long-term commitment to social impact. To ensure transparency and trust:
- Work with a respected DAF sponsor
- Publish an annual giving strategy or impact report
- Ensure funds are actively deployed—not warehoused indefinitely
A well-managed DAF can be a way to make giving more sustainable in a changing regulatory environment.
Considering a DAF
Explore Your Options
There are many reputable organizations that sponsor DAFs for corporations of all sizes. Companies often work with community foundations or financial institution-sponsored DAFs. We encourage you to explore providers that align with your company’s values, administrative needs, and impact goals. And, given possible tax and compliance implications, always be sure to involve your financial and legal teams in any decision.
Not all DAFs are the same - each comes with its own set of fees, services, and areas of expertise. It’s worth investing the time to research providers to understand how they can support your specific philanthropic goals.
Sample questions to ask DAF providers:
- What services do you offer for corporate donors? (e.g., employee matching, volunteer grants, CSR strategy support)
- Can we customize our giving program and branding? (e.g., branded giving portal, co-branded reports)
- What are the fees and minimums for corporate accounts?
- Can we contribute complex assets (e.g., stock, IP, crypto)?
- Do you support international grantmaking and compliance?
- What reporting and impact measurement tools are available?
- How quickly can we distribute grants and to whom?(e.g., restrictions, turnaround times)
- What level of advisory or strategy support do you provide?
- What happens to unspent funds—how are they invested?
The “Big Beautiful Bill” may change how your company gives — but not why you give. Impact programs remain a vital channel for companies to support communities, advance equity, and respond to global challenges. Tools like Donor-Advised Funds allow you to stay focused on impact while adapting to evolving policy.
Now is the time to evaluate whether a DAF fits into your broader giving strategy—especially if you aim to maximize year-end tax benefits, plan for multi-year commitments, or insulate your giving from political and economic uncertainty.
