November 12, 2026
For charitably inclined New Yorkers, year-end giving can provide meaningful support to important causes while also creating potential income tax benefits. However, taxpayers making numerous donations throughout the year are also responsible for maintaining records to substantiate those deductions.
That recordkeeping obligation has become particularly relevant as taxpayers and tax professionals encounter New York State inquiries requesting documentation supporting itemized deductions (otherwise known as desk audits). For taxpayers who routinely make gifts to numerous organizations, responding to such a request can mean assembling a considerable amount of paperwork.
One strategy that may make charitable giving easier to administer, while offering additional tax-planning opportunities, is a donor-advised fund, or DAF.
Although federal and New York rules are not identical, New York generally calculates itemized deductions using specified federal rules with state modifications.
Charitable contributions have specific substantiation requirements. The IRS states that donors must generally maintain a written record for monetary charitable gifts, and contributions of $250 or more require written acknowledgment from the charitable organization that satisfies specific requirements. For taxpayers making numerous charitable contributions during a year, keeping those records complete and accessible can become a substantial administrative task. A typical New York State charitable contribution desk audit will request the following information from taxpayers:
A DAF is a charitable investment account maintained by a sponsoring charitable organization under Internal Revenue Code Section 501(c)(3). A taxpayer contributes assets to the DAF and, after the contribution, the sponsoring organization has legal control over those assets. Donors retain advisory privileges over how the funds are invested and which eligible charities ultimately receive grants.
A DAF provides one place to review contributions and available charitable funds. This means taxpayers do not have to track their donations across bank statements, credit cards, checks, and individual charity acknowledgment letters. The taxpayer’s charitable contribution for income tax purposes is generally the contribution to the sponsoring charitable organization, not each subsequent grant recommended from the DAF. This can create a much cleaner recordkeeping trail.
Importantly, this does not mean that using a DAF prevents a New York State or federal examination. Tax authorities can still request support for deductions reported on a return. Rather, the advantage is administrative: when properly structured and documented, a taxpayer utilizing a DAF will likely have fewer charitable contribution transactions to substantiate.
A DAF is not necessarily appropriate for every donor. Contributions are irrevocable, and once assets are contributed, the sponsoring charitable organization has legal control over them. Taxpayers need to consider applicable federal and New York deduction limitations, their adjusted gross income, the type of property being donated and required documentation.
Additionally, DAFs are not free. There are administrative and investment fees associated with the accounts that vary depending on fund choice.
While Lumsden McCormick does not establish or manage donor-advised funds, clients interested in incorporating a DAF into their charitable giving strategy can work with Lifetime Wealth Management, an affiliate of Lumsden McCormick. Lifetime Wealth Management provides wealth management and financial planning services that can complement the tax planning provided by Lumsden McCormick, helping clients consider their charitable giving as part of their broader financial strategy.
There are differences between the federal and New York State treatment of DAF contributions, and the rules may affect the timing and availability of charitable deductions differently. Because each taxpayer’s circumstances are unique, taxpayers should speak with their tax advisor before funding a DAF to understand the federal and New York State considerations.
For taxpayers who write checks, make online contributions or charge gifts to numerous charities every year, a donor-advised fund can turn a fragmented giving process into a more centralized one. In addition to making charitable activity easier to track, a DAF may offer valuable tax and estate planning opportunities, particularly when funded with appreciated assets.
With New York taxpayers facing potentially burdensome substantiation requests for itemized deductions, good documentation is increasingly important. A DAF cannot eliminate the possibility of an audit or guarantee that a deduction will be accepted, but it can make the taxpayer’s charitable contribution records considerably easier to organize and substantiate.
If you are considering a donor-advised fund as part of your charitable giving strategy, contact your Lumsden McCormick tax advisor to discuss the potential tax implications. Our team can also coordinate with the financial professionals at Lifetime Wealth Management to help determine how a donor-advised fund may fit within your broader financial and charitable goals.
