The Snowpack Principle

Every spring, Coloradans watch snowpack reports with unusual devotion. We know the water filling our rivers in July often arrives as snow in January. The mountains collect it, then release it gradually when the valleys below need it most.

Generosity also works like this.

Many families give from a generous heart, but without much structure. A need appears; a check is written. December arrives; more charitable gifts are made. The intent is good, but the process can feel rushed, reactive and tied more to the tax calendar than to thoughtful stewardship.

A donor-advised fund, or DAF, offers a different approach.

A DAF is a charitable account held by a sponsoring public charity. You contribute assets to it and receive a charitable deduction, and then later recommend grants to qualified charities. The contribution is irrevocable, meaning those dollars are permanently set aside for charitable use, but you retain the ability to recommend how the assets are invested and which charities receive support.

It’s like a reservoir for generosity. You place resources into the fund during one season of life, then let them flow out thoughtfully over time.

With DAFs, there’s an important distinction to make between a “gift” and a “grant.” A gift is what goes into the DAF: cash, mutual funds or appreciated shares of stock. That’s when the charitable deduction occurs. A grant is what comes out of the DAF for your church, school, food bank, ministry, alma mater or other qualified charity.

If a gift is the snowfall, a grant is the river that comes thereafter. They don’t have to occur in the same season.

Those separate seasons help reduce the year-end scramble that many families know too well. Instead of rushing in late December to allocate gifts, a family can contribute to the DAF before the tax year closes and then recommend grants later, when needs become clear. A spring disaster-relief effort, a summer camp scholarship, a fall capital campaign or an unexpected community need can be supported with more patience and purpose.

Recent tax changes make this planning even more useful. For 2026, itemizers can deduct charitable contributions only to the extent that total gifts exceed 0.5% of adjusted gross income. So for a household with $300,000 of AGI, the first $1,500 of charitable giving produces no itemized deduction. Taxpayers in the 37% federal bracket also receive a maximum tax benefit of 35 cents per dollar of itemized deduction.

A DAF can help this through a strategy often called “bunching.” A family that typically gives $20,000 annually might instead contribute $100,000 to a DAF one year, receive the deduction that same year, and then grant $20,000 annually to charities for the next five years. The charities receive support on the same schedule, while the family may improve tax efficiency by concentrating deductions in one year.

The most powerful use of a DAF often involves appreciated securities.

Consider a retired couple in Highlands Ranch. They give about $20,000 annually to their church and local charities, usually by check. They also own shares of a company purchased years ago for $6,000, which are now worth $20,000.

Instead of writing checks, they contribute the appreciated shares to their DAF. By holding shares for more than a year, they may be able to deduct the fair market value while avoiding capital gains tax on the appreciation. The $14,000 gain disappears from their taxable investment account rather than being realized and taxed.

Done thoughtfully over several years, this approach can help families give more efficiently while gradually reducing embedded capital gains in a taxable portfolio. It also turns generosity into a planned discipline instead of an annual scramble.

The assets inside the DAF can continue working as well. Some sponsors offer a limited investment menu, while others allow a broader structure with separately managed accounts, open investment architecture and an optional advisor to manage the charitable assets. That can appeal to families who desire their charitable fund investments to align with their broader long-term philosophy.

Our clients often choose the same growth-of-dividend approach they already understand: owning quality businesses with histories of raising dividends over time. Those charitable dollars still promise to do good, but they can remain invested while waiting to be granted. If the account grows, future giving may also expand.

A DAF has another, softer benefit: encouraging conversations about the meaning of giving. I’ve seen highly meaningful discussions occur around kitchen tables, when parents and grandparents invite children or grandchildren to help select where grants go. Which causes do we care about? Who helped our family along the way? What are the greatest needs in our community? What does generosity look like within our family’s identity?

Those conversations leave a legacy far beyond the dollars themselves. A DAF also allows successor advisors to be named, which means the charitable habits can continue well after the original donors depart.

Somewhere in the High Country tonight, snow is quietly falling. Months from now, it will become water for rivers, farms, towns and families below. Giving can follow the same pattern. Set aside resources when the time is right. Let them grow. Then release them with care when the need appears.

That’s the snowpack principle. Generosity gathered with intention can flow for years.