Let’s talk about a few giving strategies that can help you do just that, starting with two of the most powerful tools: Qualified Charitable Distributions (QCDs) and Donor-Advised Funds (DAFs).
Qualified Charitable Distributions (QCDs)
If you are 70-1/2 or older with an IRA, a Qualified Charitable Distribution (QCD) may be an ideal solution for your philanthropic goals. As of 2025, a QCD allows you to transfer up to $108,000 per year directly from your IRA to a qualified charity. The distribution doesn’t count as taxable income as it would if you just took the money out of your IRA. If you’re 73 or older and must take Required Minimum Distributions (RMDs), a QCD can satisfy part or all of your RMD requirements. Additionally, a QCD can lower your taxable income meaning potentially less tax on Social Security and possibly lower Medicare premiums. It is important to note that the funds must go directly from your IRA to the charity. If the money touches your hands, it will not be classified as a qualified charitable distribution.
Donor-Advised Funds (DAFs)
If you have over $1 million in liquid assets and want to make charitable contributions over time while maximizing tax deductions now, a Donor-Advised Fund (DAF) may be an appropriate solution for you. Think of a DAF as your own charitable giving account. You put money into it, cash, stock, or other appreciated assets, and take a deduction in the year you contribute. Then, you can recommend grants to your favorite charities over time, even years later.
People love DAFs because of the immediate tax deduction, simplicity, and investment growth. You get a tax write-off now, even if you give to charities later. You receive one statement for your taxes, no matter how many nonprofits you support. Funds can be invested prior to grants being made. DAFs are especially useful in high-income years, or if you want to bundle several years of giving into one for a bigger deduction.
DAFs can be a great way to get your family involved in your charitable giving efforts. Additionally, this can be a
Giving Appreciated Stock
If you have highly appreciated assets like stocks or mutual funds, donating those assets instead of cash can save you from paying capital gains tax—and still give you a charitable deduction for the full market value.
Here’s how it works: You donate the stock directly to a charity or a DAF. You don’t pay capital gains on the growth. You get a deduction for the full fair market value (if you’ve held it for at least a year).
You can also gift assets like crypto and real estate, too. However, those gifts may be a bit more complex to execute.
Gifting Cash
In addition to giving to charity, you can also give cash gifts to individuals—like your children or grandchildren—without triggering gift taxes. In 2025, you can give up to $19,000 per person (or $38,000 as a married couple) each year under the annual gift tax exclusion. These gifts don’t count toward your lifetime gift and estate tax exemption, and you don’t need to file any special forms if you stay under the limit. While this isn’t a charitable deduction, it’s a meaningful way to support loved ones, whether you’re helping with a down payment, college expenses, or simply giving out of generosity. Gifting cash also allows you to see the impact of your giving while you are still living.
Strategic Timing for Maximum Impact
Giving strategically isn’t just about what you give, it’s also about when. One strategy for timing your giving is bunching deductions. If you don’t usually itemize, consider giving two or three years’ worth of donations in one year (via a DAF, perhaps) to exceed the standard deduction threshold. You may also consider giving during high-income years. If you got a bonus, sold a business, or experienced another windfall, it may be a great time to give charitably to offset the income. Alternatively, end-of-year giving is extremely popular as it’s a good time to assess your tax picture before the year closes.
Legacy Giving and Estate Planning
When it comes to thinking beyond your lifetime, charitable giving can be an integral part of your estate plan. Consider naming a charity as a beneficiary of your IRA. Additionally, you can create a charitable remainder trust or charitable gift annuity. Your DAF can also serve as a mechanism of continuing your legacy. Distributing assets through your estate plan not only supports causes close to your heart, but it can also reduce estate taxes and simplify asset distribution for your heirs.
Recordkeeping
No matter how you give, make sure to keep good records. Cash gifts over $250 require a written acknowledgement from the charity. Non-cash gifts (like stock) may require additional IRS forms to be completed. QCDs need to be properly reported on your tax return, even though they are not taxable. Work with a tax professional to see if there are any additional recordkeeping requirements that of which you need to be aware.
Charitable giving should be aligned with your values, priorities, motivations and goals. When done wisely, it may also result in a favorable tax situation. Whether you’re retired and giving through your IRA, in your peak earning years and using a DAF, or donating appreciated stock instead of cash, there are plenty of strategies to consider.
If you’re not sure where to start, it’s worth talking to a financial planner or tax advisor. They can help you align your giving with your values, your cash flow, and your financial goals.
Happy giving!
Want help making your giving more strategic? Schedule a meeting to talk through your options with a Certified Financial Planner®.
