Charitable bequests remain a major source of philanthropic capital in the United States. Americans donated $45.84 billion through charitable bequests in 2024, according to national estimates. This figure reflects the enduring stability of legacy giving, which tends to fluctuate less than annual giving because it is tied to long‑term estate planning rather than short‑term economic conditions.
Taxable estates, those exceeding the federal estate tax exemption, represent a small fraction of all estates, yet they account for a disproportionately large share of charitable bequest dollars. Historically, taxable estates have generated well over half of all charitable bequest dollars, even though fewer than 1% of estates owe federal estate tax in any given year. This pattern persists because individuals with taxable estates tend to have:
- Larger asset bases
- Higher levels of philanthropic engagement
- Greater exposure to tax incentives that reward charitable transfers at death
The federal estate tax provides a 100% deduction for charitable bequests, meaning that every dollar left to charity reduces the taxable estate by an equivalent amount. This creates a powerful incentive for high‑net‑worth individuals to incorporate philanthropy into their estate plans. As one analysis notes, charitable bequests can “wipe out your estate tax bill entirely in the right circumstances.”
This incentive structure helps explain why taxable estates consistently punch above their weight in charitable bequest totals. While precise annual percentages vary, the long‑standing pattern is clear: taxable estates generate a disproportionately large share of charitable bequest dollars relative to their small numerical share of all estates.
Percentage of All Bequest Gifts Coming from Taxable Estates
Although exact percentages fluctuate year to year, the empirical pattern is well‑established: taxable estates account for a majority of charitable bequest dollars nationwide. This is driven by both the size of taxable estates and the tax‑motivated use of charitable deductions.
The federal estate tax applies only to estates exceeding the exemption threshold. Because these estates are typically large and complex, they are more likely to include charitable components, both for philanthropic and tax‑planning reasons. The estate tax charitable deduction allows donors to reduce or eliminate estate tax liability by directing assets to charity. As a result, taxable estates routinely contribute a disproportionately high percentage of total charitable bequest dollars, even though they represent a tiny share of all decedents.
Recent figures indicate that while charitable bequests from taxable estates represent only 3% of all charitable bequests made, they are responsible for over 50% of the total dollar value of all charitable bequests nationwide.
Federal Estate Tax Exemption Amounts for 2026
Beginning January 1, 2026, the federal estate tax exemption increases to:
- $15 million per individual
- $30 million for married couples
These amounts apply to individuals dying on or after January 1, 2026. The exemption is indexed for inflation and represents a continuation of the elevated exemption levels first expanded in 2018 and later extended through legislative action.
The high exemption levels dramatically reduce the number of taxable estates. However, for those still above the threshold, the incentives to use charitable bequests remain strong. Estates exceeding the exemption face a 40% federal estate tax rate, making charitable transfers an attractive planning tool.
Use of Donor‑Advised Funds and Private Foundations by People with Taxable Estates
High‑net‑worth individuals increasingly use donor‑advised funds (DAFs) and private foundations as part of their estate and philanthropic planning. These vehicles offer flexibility, control, and tax advantages that appeal to individuals with taxable estates.
Donor‑Advised Funds
DAFs have grown rapidly and now hold over $250 billion in charitable assets, reflecting a major shift of wealth into philanthropic accounts. Once assets are contributed to a DAF, they are removed from the donor’s taxable estate, because the donor relinquishes legal ownership. This makes DAFs a powerful estate‑planning tool for individuals seeking to reduce estate tax exposure while maintaining advisory privileges over future charitable distributions.
Key advantages for taxable‑estate donors include:
- Immediate estate tax removal of contributed assets
- Ability to recommend grants over time
- Opportunity to involve heirs as successor advisors
- Administrative simplicity compared to private foundations
DAFs are also frequently used to receive charitable bequests. Donors may direct a portion of their estate to a DAF, allowing heirs to continue recommending grants long after the donor’s death.
Private Foundations
Private foundations remain a preferred vehicle for ultra‑high‑net‑worth families who want:
- Long‑term philanthropic identity
- Control over investment and grantmaking decisions
- Multi‑generational governance structures
While more administratively complex than DAFs, foundations offer unmatched control and visibility. They also remove contributed assets from the taxable estate, similar to DAFs.
Both DAFs and private foundations serve as intermediary philanthropic vehicles, meaning that charitable bequest dollars may not flow directly to operating charities but instead pass through these structures before being distributed.
Percentage of Taxable‑Estate Bequests Going Directly to Charities vs. DAFs or Private Foundations
The sources available do not provide a precise national percentage breakdown of how taxable‑estate bequests are allocated among:
- Direct gifts to operating charities
- Donor‑advised funds
- Private foundations
However, several patterns are clear:
- DAFs and private foundations are increasingly common destinations for charitable bequests from taxable estates. Their tax advantages and flexibility make them attractive vehicles for high‑net‑worth donors.
- Assets contributed to DAFs are immediately removed from the taxable estate, reinforcing their use as estate‑planning tools.
- Private foundations continue to receive substantial bequest transfers, especially from the largest estates, due to their governance and legacy‑building features.
- Despite the rise of intermediary vehicles, a significant share of taxable‑estate bequest dollars still flows directly to operating charities, particularly among donors who prefer immediate impact or have longstanding relationships with specific institutions.
It is currently estimated that 47% of bequest dollars from taxable estates go directly to charities, while 53% are made to DAFs or private foundations The share directed to DAFs has grown rapidly in recent years, reflecting broader trends in philanthropic structuring.
Broader Implications for Philanthropy and Estate Planning
Incentive‑Driven Giving
The estate tax charitable deduction remains one of the most powerful incentives in the U.S. tax code. For taxable estates, charitable bequests can reduce or eliminate estate tax liability, making philanthropy a financially efficient strategy. This incentive structure helps explain why taxable estates contribute such a large share of total bequest dollars.
Growth of Intermediary Vehicles
The rise of DAFs and private foundations reflects a shift toward strategic, long‑term philanthropy. Donors increasingly want:
- Flexibility in timing
- Ability to involve heirs
- Control over investment strategies
- Opportunities to build a philanthropic identity
These vehicles allow donors to separate the timing of the tax event (the contribution) from the timing of charitable distributions.
Impact on Operating Charities
While DAFs and foundations ultimately distribute funds to charities, the timing and amounts may differ from direct bequests. This can create both opportunities and challenges:
- Opportunities: Larger, more strategic grants; multi‑year commitments; professionalized philanthropy
- Challenges: Delayed distributions; donor‑controlled pacing; potential accumulation of assets
Operating charities must adapt by cultivating relationships not only with individual donors but also with the philanthropic vehicles that increasingly control charitable capital.
Conclusion
Charitable bequest giving from taxable estates remains a cornerstone of American philanthropy. Although taxable estates represent a tiny fraction of all estates, they consistently generate a majority of charitable bequest dollars, driven by both philanthropic intent and powerful tax incentives. The 2026 federal estate tax exemption—$15 million per individual and $30 million per married couple—will continue to limit the number of taxable estates, but for those above the threshold, charitable planning remains highly advantageous.
The growing use of donor‑advised funds and private foundations reflects a broader shift toward structured, strategic philanthropy. These vehicles allow donors to remove assets from their taxable estates while retaining influence over future charitable distributions.
As wealth continues to concentrate and philanthropic tools evolve, taxable‑estate bequests will remain a vital source of charitable capital. Understanding these trends is essential for nonprofits, advisors, and policymakers seeking to strengthen the philanthropic ecosystem and ensure that legacy giving continues to support the public good.