Charitable Giving

Strategic Year-End Charitable Giving

Year-end charitable giving allows you to support causes you care about while potentially reducing your tax liability. Understanding the tax implications and strategic giving methods can maximize both your impact and your benefits.

Tax Benefits of Charitable Giving

Itemizing vs. Standard Deduction

• 2024 standard deduction: $14,600 (single), $29,200 (married filing jointly)
• Charitable deductions only benefit if you itemize
• Consider bunching donations in alternating years to exceed standard deduction
• Keep detailed records of all charitable contributions
• Obtain written acknowledgment for donations over $250

Donation Limits and Rules

• Cash donations: Generally limited to 60% of AGI
• Appreciated securities: Limited to 30% of AGI
• Excess contributions can be carried forward five years
• Only donations to qualified 501(c)(3) organizations are deductible
• Verify charity status at IRS Tax Exempt Organization Search

Smart Giving Strategies

Donating Appreciated Securities

One of the most tax-efficient giving methods:

• Donate stocks, bonds, or mutual funds held over one year
• Deduct full fair market value
• Avoid paying capital gains tax on appreciation
• Can provide significantly more to charity than cash donations
• Must transfer securities directly to charity
• Obtain written acknowledgment from charity

Qualified Charitable Distributions (QCDs)

For those age 70½ or older with traditional IRAs:

• Transfer up to $105,000 directly from IRA to qualified charity
• Counts toward required minimum distribution
• Excluded from taxable income entirely
• More beneficial than taking distribution and donating
• Must be direct transfer from IRA to charity
• Available regardless of whether you itemize

Donor-Advised Funds

A flexible vehicle for charitable giving:

• Contribute assets and receive immediate tax deduction
• Invest funds for potential tax-free growth
• Distribute to charities over time
• Perfect for bunching donations in high-income years
• Simplifies recordkeeping with one tax receipt
• Allows for anonymous giving if desired
• No minimum distribution requirements

Bunching Strategy

Maximize tax benefits by concentrating donations:

• Make two or three years of donations in one year
• Itemize deductions in bunching year
• Take standard deduction in other years
• Use donor-advised fund to time deduction vs. actual charity distribution
• Calculate whether bunching provides greater total tax benefit
• Consider using for large planned giving

Noncash Charitable Contributions

Donating Property and Goods

• Clothing, household items, vehicles
• Must be in good condition or better
• Deduction limited to fair market value
• Items over $500 require Form 8283
• Items over $5,000 require qualified appraisal
• Keep detailed records and photos

Real Estate Donations

• Donate property directly to charity
• Receive deduction for fair market value
• Avoid capital gains tax on appreciation
• Requires qualified appraisal
• Consider donating to charity and receiving life estate
• Explore charitable remainder trusts

Employer Matching Programs

Double your charitable impact:

• Check if your employer matches charitable donations
• Understand matching limits and eligible organizations
• Submit matching requests before year-end deadlines
• Consider volunteering if employer offers paid volunteer time
• Some employers match donations to educational institutions
• Retired employees may still be eligible for matching

Researching Charities

Ensure your donations are used effectively:

• Check charity ratings at Charity Navigator, GuideStar, or CharityWatch
• Review financial statements and overhead percentages
• Verify 501(c)(3) status with IRS
• Research program effectiveness and impact
• Be wary of high-pressure solicitations
• Watch for charity imposters and soundalike names
• Confirm secure donation processing

Volunteering Your Time

While time isn't tax-deductible, related expenses are:

• Mileage driven for charitable purposes (14 cents per mile)
• Out-of-pocket expenses directly related to volunteer work
• Uniforms required for volunteering
• Travel expenses for charitable trips
• Keep detailed records of all volunteer-related expenses

Planned Giving Options

Charitable Remainder Trusts

• Donate assets to trust and receive income stream
• Remainder goes to charity after term or death
• Receive immediate partial tax deduction
• Avoid capital gains on appreciated assets
• Good for highly appreciated, low-yield assets

Charitable Lead Trusts

• Trust pays income to charity for specified period
• Assets return to donor or beneficiaries afterward
• Reduces estate and gift taxes
• Useful for transferring wealth to heirs

End-of-Year Giving Tips

• Review your annual charitable budget
• Consider your tax situation and giving strategy
• Make donations by December 31 for current year deduction
• Credit card donations count when charged, not when paid
• Checks count when mailed, not when cashed
• Set giving goals for the upcoming year
• Consider monthly recurring donations for budgeting

Common Charitable Giving Mistakes

Avoid these pitfalls:

• Not keeping adequate documentation
• Overvaluing donated property
• Donating to non-qualified organizations
• Missing year-end deadlines
• Not researching charity effectiveness
• Ignoring more tax-efficient giving strategies
• Failing to track employer matching opportunities