The role of charitable giving in financial planning
Many families include charitable support as part of their long-term plan. Deciding how much to give, when to give it, and through which vehicles requires balancing personal values with tax and estate considerations. This article explains the common structures without recommending which causes to support or how large your gift should be.
Outright gifts: cash, securities, and appreciated assets
- Cash donations are straightforward and may qualify for a charitable deduction on your tax return, subject to AGI limits.
- Donating appreciated securities can allow you to avoid capital-gains tax on the appreciation while receiving a deduction for the fair-market value.
- Gifts of appreciated real estate or other property follow similar rules but require appraisals and documentation.
Donor-advised funds
A donor-advised fund is an account you contribute to (receiving an immediate tax deduction), then recommend grants to charities over time. DAFs offer flexibility: bunch multiple years of giving into one high-income year, then distribute gradually.
Qualified charitable distributions
If you are 70½ or older with a traditional IRA, you can direct up to $100,000 per year from the IRA to charity. The distribution counts toward your RMD and is excluded from taxable income.
Questions to discuss with your advisor
- How does charitable giving interact with your income and estate-tax picture?
- Would bunching multiple years of giving make sense?
- If you face RMDs, does a QCD strategy fit your goals?
This resource is educational only and does not constitute financial, tax, or legal advice. Program rules are defined by the official plan documents. For guidance on your individual situation, please consult a qualified advisor.