The Holiday Season – A Time to Give back: Strategies to Maximize Impact and Tax
Written by: Scott Strohecker, CFP®, EA
and many individuals begin thinking about how to give back. For donors, year-end
charitable giving isn’t just an opportunity to make a meaningful impact; it’s also a valuable moment for thoughtful tax planning. While working with clients on their financial plan, we often tell clients that charitable giving is most effective when generosity and strategy work hand in hand.
Whether you give occasionally or as part of a structured philanthropic plan, the final
months of the year present unique opportunities to optimize your gift. Here are a few things to consider during this giving time of year:
1. Start With Your “Why”
cause close to your heart? Building a family legacy of philanthropy? Reducing taxable
income? Clarity of purpose helps determine the right giving vehicle, the right assets, and the right timing. It also ensures your giving remains personally meaningful—not just financially efficient.
2. Donating Appreciated Securities is Often More Efficient Than Cash
One of the most overlooked yet powerful strategies is donating long-term appreciated
securities such as stocks, ETFs, or mutual funds.
Benefits include:
• No capital gains tax on the appreciation
• Full charitable deduction for the fair market value (if itemizing)
• Larger impact for the charity since the full value goes to the organization
highly appreciated positions you’ve considered trimming.
3. Leverage Donor-Advised Funds (DAFs) for Flexibility
Donor-advised funds have become a go-to tool for strategic giving. They allow you to:
• Make a deductible donation now
• Invest the funds tax-free within the DAF
• Distribute grants to charities over time
A DAF works well in years when income is unusually high—such as after a business sale,
bonuses, or vesting equity grants. You can “bunch” multiple years of donations into the
current tax year to maximize itemized deductions while giving at your own pace.
4. Use Qualified Charitable Distributions (QCDs) if You’re 70½ or Older
For retirees with IRAs, QCDs offer one of the most tax-efficient ways to give. A QCD allows you to donate up to $108,000 for 2025 ($115,000 for 2026) directly from your IRA to a qualified charity.
Why this strategy stands out:
• The distribution is not included in taxable income
• It can satisfy all or part of your Required Minimum Distribution (RMD)
• It is an excellent way to reduce the tax impact of traditional IRA withdrawals
Note: QCDs cannot be sent to DAFs or private foundations.
5. Consider “Bunching” Deductions with a Multi-Year Strategy
charitable gifts don’t provide a tax deduction. However, by bunching several years of
donations into one tax year, you may exceed the standard deduction and itemize.
This works especially well when paired with:
• Donor-advised funds
• Planned large charitable commitments
• Years with higher income
In off years, you can revert to taking the standard deduction.
6. Review Which Assets are Best to Give
Cash is simple, but not always optimal. Depending on your situation, consider giving:
• Appreciated stocks or funds (highly tax-efficient)
• Restricted or concentrated stock positions
• Real estate or privately held business interests (requires advance planning)
• Crypto assets (if long-term, can be treated similarly to appreciated securities)
Each asset type has its own rules, so planning ahead is crucial.
7. Verify Charitable Organizations Before Year-End
To qualify for a deduction, your gift must go to a qualified 501(c)(3) organization and be
completed by December 31. Always verify:
• The charity’s IRS status
• Whether you’ll receive a tax receipt
• If your employer offers matching gifts, which can double your impact
Final Thoughts
Year-end charitable giving is more than a seasonal tradition - it’s a powerful opportunity to advance the causes you care about while strengthening your financial plan. Whether you’re looking to maximize tax benefits or build a lasting philanthropic legacy, the right strategy can make a meaningful difference.
If a year-end gift is on your mind, take the opportunity to determine the most effective approach. With the right strategy, your generosity can go even further.
Contact us to build a thoughtful giving plan.
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