Charitable Gift Planning
Charitable gift planning offers a thoughtful way to help align lifelong commitments with long-term financial and legacy goals. When approached strategically, philanthropy can help support the institutions and causes that matter most while integrating with a broader retirement, tax, and estate plan.
There are several tools that can incorporate charitable gifting into your broader financial plan. Understanding the range of charitable gifting options helps donors align their philanthropic goals with tax efficiency, long-term planning, and the lasting impact they hope to make.
Gifting Cash, Stock, or Other After-Tax Assets
Gifting cash is typically the easiest and most common form of giving, but it can offer fewer tax benefits than some of the other methods described. This takes the form of gifting via check or debit card, using a credit card, or gifting cash to a charitable organization. Cash gifts that are listed as an itemized deduction are subject to a limit of 60% of your adjusted gross income (AGI) for the year.
For those who do not itemize their deduction, some additional benefit to gifting cash may be available in 2026. The One Big Beautiful Bill Act allows for an additional $1,000 deduction for single filers and $2,000 for joint filers to deduct charitable gifts made with cash, even when taking the standard deduction, subject to legislative change and IRS rules.
Gifting stock or appreciated assets may qualify as an itemized deduction and may eliminate recognition of taxable gain on the gifted assets, subject to IRS rules, holding period requirements, and AGI limitations.
There are a few ways to handle these gifts. You can transfer appreciated assets into a donor advised fund (DAF) where they are no longer subject to capital gains tax and are available for future charitable giving.
From there, you can write checks from the DAF to your charities of choice. It doesn’t matter when you make a charitable gift to receive a tax benefit; it matters when the assets are gifted into the DAF. Why is that important? It allows you to bundle multiple years’ charitable gifts into one tax year to receive a potentially larger benefit. Let’s say itemizing is out of the question in a normal tax year. Bundling the next several years of charitable gifts into the DAF may result in an immediate tax benefit. You may spread these gifts over the course of the next several years.
The other method is directly gifting appreciated stock, mutual funds, or ETFs to the charitable institution. Logistically, this differs from a DAF because you make the gift directly from your brokerage account. This method requires you to identify the specific shares, request the brokerage transfer instructions from the charity, and initiate the transfer. The other main difference is that you can’t bundle multiple years’ gifts because the charity receives the gift when you transfer the shares.
Gifts of property other than cash or publicly traded securities can include tangible personal property, real estate, business interest, and intellectual property. Each of these carry their own unique challenges. Complex documentation, appraisal, and higher IRS scrutiny are common hurdles. Gifting these types of property has several advantages. It can eliminate the tax burden of holding a low cost-basis asset and can remove illiquid assets from your estate. While not as common as gifting cash or stock, gifting personal property to charity is situational and depends on an individual’s overall financial circumstances.
Gifting From Retirement Accounts
Using your pre-tax retirement assets to make charitable gifts is a common form of tax planning for retirees. One of the most common forms of charitable gifting from your retirement assets is a qualified charitable distribution (QCD) from your individual retirement account (IRA). QCDs are a unique feature of an IRA – a feature that 403(b)s, 401(k)s, and other qualified retirement plans do not have. Starting at age 70.5, individuals can use their IRAs to donate to charities and potentially make that distribution be non-taxable. Before required minimum distribution (RMD) age, this helps you preserve their after-tax status and potentially lower future RMDs by lowering their account balances. QCDs may become even more impactful when you start taking RMDs. QCDs generally count toward annual RMDs and may reduce taxable income for the year, subject to IRS eligibility rules and reporting requirements.
There is a limit to the amount of QCDs that you can make in a given tax year. In 2026, the limit is $111,000 per taxpayer. For joint filers, this number is $222,000, but each spouse must use their own IRA.
Another effective tool is adding charitable beneficiaries to your pre-tax retirement accounts. It can be advantageous to leave pre-tax assets to charity, as these assets would otherwise be taxed when inherited by non-charitable beneficiaries. Roth and brokerage accounts are generally more suitable for non-charitable beneficiaries due to their more favorable tax treatment.
There are several other tools for charitable gift structuring that may make sense for your unique situation. These tools include charitable gifting annuities (CGA), charitable remainder trusts (CRT) and charitable lead trusts (CLT). No matter the situation, there is likely a potential solution to your unique gifting structure needs.
Which method of gifting is best for your situation? Charitable gifting is generally evaluated in context, as it often depends on an individual’s tax, estate, and investment considerations. Depending on individual circumstances, some pre-retirement individuals may evaluate gifting appreciated after-tax assets, while some retirees may evaluate a combination of pre-tax retirement assets and after-tax gifts as part of a broader charitable planning discussion. Ultimately, effective charitable gifting is not just about giving more, but about giving thoughtfully.
Whether through cash, appreciated stock, QCDs, or charitable trusts, the right approach can potentially align generosity with tax efficiency, family goals, and legacy planning. With thoughtful planning and intention, charitable giving becomes more than a year-end tax decision and instead a meaningful part of a broader financial strategy that helps support the causes that matter most.
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.
Aaron Y. Dykxhoorn
Financial Advisor
CFP®, MS