Before You Make That Charitable Donation This Fall 

Every fall, without fail, the donation requests start arriving. 

The alumni envelope from your college. The letter from your favorite local charity. The hospital foundation. The church. The food pantry. The organization your grandchildren are involved with. 

For most dedicated savers, people who have spent a lifetime being intentional about every financial decision they make, charitable giving is important. It reflects who they are and what they value. And yet, when it comes to how they actually make those donations, most people simply reach for their checkbook without giving it a second thought. 

That instinct is generous. But it may not be as smart as it could be. 

With a few minutes of planning, and in some cases, just a simple phone call to your account custodian or financial advisor, the causes you care about may potentially receive more of your money, while the IRS potentially receives less. Giving more, keeping more, and paying less in taxes is not a loophole. It is simply knowing your options. 

Here are two strategies available for you to consider right now; one for anyone with appreciated investments, and one exclusively available once you reach age 70½. 

But first, an important update on how recent legislation affects charitable giving starting in 2026. 

What Changed in 2026: The One Big Beautiful Bill Act  

Before we dive into the strategies, it’s worth noting that the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made several meaningful changes to charitable giving that take effect in 2026. 

There are two changes worth knowing: 

1. A new universal deduction for non-itemizers. For the first time, individuals who take the standard deduction rather than itemizing can now claim a charitable deduction for cash gifts of up to $1,000 per individual, or $2,000 for couples filing jointly. This is beneficial for the majority of Americans who no longer itemize. 

2. A new floor for itemizers. If you do itemize, your charitable contributions must now exceed 0.5% of your adjusted gross income (AGI) before any donation qualifies for a deduction. If your AGI is $500,000, the first $2,500 of charitable contributions ($500,000 x 0.5%) would not be deductible, only giving above that threshold qualifies. Additionally, deductions are now capped at 35%, even for those in the 37% marginal tax bracket. 

What this means practically. For higher-income givers who itemize, these changes make the two strategies below even more important than they were before. Let’s walk through both. 

Strategy #1: Donate Appreciated Shares Instead of Cash 

This strategy is available to anyone who holds investments: stocks, mutual funds, or ETFs outside of an IRA that have grown in value since you purchased them. 

Here’s the core principle: when you sell an appreciated investment, you owe capital gains taxes on the growth. But when you donate those same shares directly to charity rather than selling them first, the capital gains tax can be eliminated because charitable organizations don’t pay taxes. They can sell your donated shares and keep every dollar. 

The result is that your charity receives more, and you receive a larger tax deduction. Let’s walk through the numbers side by side. 

Example: A $10,000 Donation (32% federal tax bracket) 

Assume you purchased an investment years ago for $4,000. It is now worth $10,000 resulting in a $6,000 gain if sold. 

Option A: Sell the shares, then donate the cash proceeds. 

You sell your $10,000 position. At a combined federal and state capital gains tax rate of 25%, you owe $1,500 in taxes on the $6,000 gain, netting you $8,500 after taxes. You donate that $8,500 to your charity. At your 32% tax bracket, your federal income tax savings on the donation is $2,720. 

Bottom line: Your charity receives $8,500. Your tax savings is $2,720. 

Option B: Donate the shares directly to charity. 

Instead of selling, you transfer the full $10,000 position directly to your charity. They sell the shares and keep all $10,000 with no capital gains tax owed. Your federal income tax savings on the full $10,000 donation, at your 32% bracket, is $3,200, assuming the donation is fully deductible. 

Bottom line: Your charity receives $10,000. Your tax savings is $3,200. 

By simply changing how you give, not how much, your charity can receive an additional $1,500 and you save an additional $480 in taxes. The total combined benefit of donating shares instead of cash: $1,980 on a single $10,000 donation. 

How to Do It: Two Options 

The mechanics are simpler than most people expect. 

Option 1: Donate directly to your charity. Contact your charity of choice and ask for their securities gifting instructions: their brokerage account number, custodian name, and DTC number. Every sizable charitable organization has a brokerage account set up for exactly this purpose. Provide those instructions to your account custodian (Schwab, Fidelity, etc.), specify the shares you wish to transfer, and you’re done. You’ll receive a receipt from the charitable organization, and the deduction is based on the fair market value of the donated shares on the date of the gift.  

Option 2: Use a Donor-Advised Fund (DAF). A donor-advised fund is a separately designated charitable account that you fund with appreciated shares. Once you transfer the shares in, you receive the full charitable deduction immediately in the year you make the transfer. You then instruct the fund custodian to distribute donations to your charities of choice on whatever timetable you prefer, and checks go directly from the fund to your charities. 

There are two advantages to this approach. 

First, simplicity: instead of coordinating a separate share transfer for each of your charities, you make one transfer to the donor-advised fund and direct contributions from there, i.e. far less administrative friction. 

Second, and more importantly: a donor-advised fund allows you to front-load a larger donation in a single year, potentially enough to exceed the standard deduction threshold and unlock meaningful itemized deduction benefits, and then distribute those funds to your charities over multiple years at your own pace. 

This strategy can be powerful given today’s high standard deduction. A married couple over age 65 has a standard deduction of approximately $35,500 in 2026. If your total itemized deductions — including charitable donations — don’t exceed that threshold, your donations provide no additional tax benefit at all. By bundling two or three years of planned charitable giving into a single donor-advised fund contribution, you may be able to clear that threshold in year one, claim the full itemized deduction, and continue making your normal annual donations from the fund in subsequent years. 

Strategy #2: Qualified Charitable Distributions (QCDs): Giving Directly from Your IRA 

If you are age 70½ or older and you have charitable intentions, this can be one of the most tax-efficient giving strategies available to you. And it is consistently one of the most underutilized. 

Here’s the situation most people find themselves in. At age 73, (or 75 if you were born in 1960 or later), the IRS requires you to take a Required Minimum Distribution (RMD) from your IRA each year — and pay ordinary income taxes on every dollar withdrawn. Many people take that distribution, pay the taxes, and then write a check to their favorite charity from the after-tax proceeds. 

That sequence — withdraw, pay taxes, donate, deduct — sounds logical. But it involves paying taxes that you never had to pay in the first place. 

A Qualified Charitable Distribution (QCD) can eliminate that unnecessary step entirely. 

With a QCD, you direct your IRA custodian to transfer funds from your IRA directly to your charity of choice. The money never passes through your hands, never appears as taxable income on your return, and yet may satisfy your RMD obligation for the year, up to $111,000 per person in 2026. 

Here is an example: If your RMD for the year is $50,000 and you make a $10,000 QCD to your charity, you pay income taxes on only $40,000, not $50,000. At a combined federal and state income tax rate of 30%, that’s $3,000 in taxes you wouldn’t owe. 

And here’s the feature that makes QCDs particularly powerful in today’s tax environment: the tax benefit applies whether you itemize or not. 

Under normal circumstances, a charitable donation only provides a tax benefit if your total itemized deductions exceed your standard deduction. For many retirees, particularly those who no longer carry a mortgage, that threshold is difficult to clear. Your charitable donation ends up buried inside the standard deduction, providing no additional tax benefit whatsoever. 

A QCD bypasses this problem entirely. Because the distribution is excluded from your taxable income rather than claimed as a deduction, it reduces your tax bill regardless of whether you itemize. It works silently and powerfully in the background, and many people who are eligible for it have never heard of it. 

A note on the mechanics: To execute a QCD, simply contact your IRA custodian: Schwab, Fidelity, or whichever firm holds your IRA, provide the name of your charity and the amount you wish to donate, and sign the appropriate form. Your custodian will issue a check payable directly to the charity. The charity receives the full amount. Your 1099-R will report the gross distribution, and the QCD is reported on your tax return as a nontaxable qualified charitable distribution. 

One important detail: the charity must be a qualifying 501(c)(3) organization. Donor-advised funds, private foundations, and supporting organizations do not qualify for QCD treatment so this strategy works best for direct donations to your established charities of choice. 

The Lesson Behind Both Strategies 

Whether you are donating shares or distributing directly from your IRA, the principle is the same one that runs through everything we do together: be intentional and strategic with every financial decision, including the generous ones. 

Writing a check to your alma mater is a wonderful thing. Writing a check when you could have donated appreciated shares and saved $1,500 in unnecessary taxes is a wonderful thing done the hard way. 

The causes you care about deserve every dollar you intend to give them. A few minutes of planning before you make your first donation this fall can help ensure that’s exactly what they receive while keeping more of your hard-earned wealth where it belongs. 

If you’d like to explore either of these strategies in the context of your own specific situation: your investment holdings, your IRA balance, your RMD, and your giving intentions, we’re here to help you think it through. 

Simply reach out and let us know. 

This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.