Charitable Giving Strategies: Give Smart, Get Tax Alpha
Strategic philanthropy isn't just generous—it's tax-efficient wealth optimization.
Tax benefits that amplify your impact
The Power of Strategic Giving
Most people think of charitable giving as purely altruistic. Smart donors understand it's also powerful tax planning.
Reduce Taxable Income
Charitable deductions directly reduce your taxable income. In the 37% bracket, $100K in donations saves $37K in taxes.
Avoid Capital Gains
Donate appreciated assets instead of cash. Full deduction, zero capital gains tax on the appreciation.
Optimize Timing
Bunch multiple years of giving into one year to exceed standard deduction threshold and maximize tax benefit.
The Swiss Army knife of charitable giving
Strategy 1: Donor Advised Funds (DAF)
How DAFs Work
Donate cash, securities, or other assets to DAF sponsor (Fidelity, Schwab, Vanguard, etc.)
Tax deduction in the year of contribution—even if you haven't decided where to give yet
Funds grow tax-free while you decide. Choose from investment options offered by sponsor.
Recommend grants to any 501(c)(3) whenever you want. No timeline requirements.
💡 DAF Bunching Strategy
Instead of giving $10K/year for 5 years, donate $50K to a DAF in Year 1:
- Year 1: $50K deduction → itemize (exceed standard deduction)
- Years 2-5: Take standard deduction
- Grant $10K/year to charities from the DAF
- Result: Same charitable impact, bigger tax benefit
The double tax benefit
Strategy 2: Appreciated Securities
Sell Then Donate Cash
- Stock value: $100,000
- Cost basis: $20,000
- Capital gain: $80,000
- Tax @ 23.8%: $19,040
- Cash to donate: $80,960
- Deduction: $80,960
Donate Stock Directly
- Stock value: $100,000
- Cost basis: $20,000
- Capital gain: $80,000
- Tax: $0
- Value to charity: $100,000
- Deduction: $100,000
Same donation intent. $19,040 more to charity. $19,040 larger deduction.
Income for you, remainder to charity
Strategy 3: Charitable Remainder Trusts
How CRTs Work
No capital gains tax on the transfer—asset is now in the trust
Deduction based on present value of charity's future remainder interest
Full value compounds without capital gains drag
5-50% of trust value annually (CRAT or CRUT)
At death (or end of term), charity receives what's left
💡 Best Use Cases for CRTs
- Selling a business or highly appreciated stock
- Real estate with low basis
- Concentrated stock positions you want to diversify
- Creating retirement income while supporting charity
Additional tools for strategic givers
More Charitable Strategies
Qualified Charitable Distribution
Age 70½+? Donate up to $105,000 directly from IRA to charity. Counts toward RMD but not taxable income.
Private Foundation
For $5M+ in giving. More control and family involvement. Higher admin costs and compliance requirements.
Charitable Lead Trust
Opposite of CRT: charity gets income now, heirs get remainder later. Estate planning tool for wealth transfer.
Donate Real Estate
Full fair market value deduction, no capital gains. Property must be unencumbered (no mortgage).
Donate Art/Collectibles
Full FMV deduction if related to charity's mission. Otherwise, deduction limited to cost basis.
Charitable Gift Annuity
Like a CRT but simpler. Fixed payments for life in exchange for donation. Part of each payment is tax-free.
How much can you deduct?
Deduction Limits to Know
| Donation Type | Public Charity | Private Foundation |
|---|---|---|
| Cash | 60% of AGI | 30% of AGI |
| Appreciated Securities | 30% of AGI | 20% of AGI |
| Real Estate/Other Property | 30% of AGI | 20% of AGI |
Excess deductions can be carried forward for 5 years. DAFs count as public charities.
Frequently Asked Questions
Ready to Optimize Your Charitable Giving?
Strategic giving amplifies both your impact and your tax efficiency. Let's build a giving strategy that works for you.