Ten effective strategies for charitable giving

No matter the cause you’d like to support, optimizing your charitable giving strategy can dramatically increase the impact of each dollar you donate. This list of strategies for charitable giving includes several tried and true methods that many philanthropic donors utilize. They can help you reduce your tax liability and boost the impact of your donations.

This list can help you better understand the variety of giving strategies available, but the specific approaches that work best for your household will depend on many factors, including your household income, tax filing status, current asset holdings, and more. That why you should also consult with a tax professional to help establish a charitable giving plan tailored to your circumstances.

Start by understanding the basic IRS rules for charitable giving

1. Tax-deductible donations can only be made to qualifying charitable and/or religious organizations. You can use this Tax Exempt Organization Search to confirm eligibility.

2. Donations are generally only tax-deductible if you itemize your deductions on your tax return. This means that if you take the Standard Deduction, you generally cannot deduct charitable contributions.

3. Only "charitable contributions" are deductible. A charitable contribution is a voluntary contribution that is made without the expectation of substantial benefits in return. For example, donating to your local nonprofit nature preserve might be tax deductible — but purchasing an item in their gift shop would likely not be (because you get a benefit in return).

4. In some cases, only a portion of your contribution is deductible. For instance, if you attend a charity dinner that costs $100, you may need to calculate the fair market value of the benefits you receive (the meal, in this case). If the fair market value is $30, then $70 of your $100 cost might be considered a donation and is therefore tax-deductible — but the $30 meal cost is not.

5. Tax-deductible contributions in a given tax year are generally limited to 60% of the taxpayer’s adjusted gross income (AGI). Certain qualified contributions may be exempt from this adjusted gross income limitation.

In addition to these basic rules, there are other specific situational rules, limitations, and exclusions that should be discussed with your tax professional.

Consider the benefits of charitable giving

A commitment to charitable giving can have a positive impact on your personal life and your financial well-being. Some of the primary reasons to give include:

• It benefits causes you care about: Your donations of cash or goods can help further the causes and address societal needs that are close to your heart.

• It can reduce your income tax liability: (If you itemize deductions!) Charitable donations can reduce the amount of taxes you owe by lowering your taxable income.

• It can reduce your capital gains tax liability: (If you donate appreciated assets.) Donating assets that have increased in value can help you do good while avoiding capital gains tax on those assets.

• It can reduce estate taxes: (If planned properly.) That can ultimately allow more of your wealth go to the people and things you really care about.

Perhaps most importantly, giving to worthy causes can make us happier! Research has consistently shown that giving to others improves markers of happiness for the giver.

10 ideas and strategies for getting more out of your charitable giving

1. Itemize your deductions

This is the most important — and basic — strategy for anyone who plans to donate a significant amount of money. With the standard deduction, taxpayers can deduct a flat amount ($15,000 for single tax filers in 2025). With itemized deductions, taxpayers can deduct their actual qualifying deductions, which can include charitable contributions, mortgage interest, and much more.

Around 90% of Americans use the Standard Deduction in a typical tax year. For many households, this makes good financial sense. But for certain individuals and households — particularly those making significant charitable contributions — it makes more sense to itemize deductions.

2. Donate assets that have appreciated

You can often donate specific assets — like stocks or bonds — instead of cash. This saves you from having to pay capital gains tax, in most cases, and passes on the full value to the charitable organization.

For example, say you purchased $10,000 of stock in a company several years ago. It has since appreciated to $30,000. If you sell the stock, you'll receive $30,000 in proceeds but will owe long-term capital gains tax (15%+) on the $20,000 of profit, resulting in a tax liability of $3,000. And depending on the state you live in, there could also be state-level capital gains. If you instead donate the stock itself to a charitable organization, you won’t owe any capital gains tax. And (with certain conditions) you may be able to claim a $30,000 tax deduction, not just the $10,000 purchase price. Best of all because the nonprofit is tax-exempt, they won’t pay any capital gains when they sell the stock, so the entire $30,000 will go to supporting your cause.

3. Set up a donor-advised fund

A donor-advised fund is a separate tax-advantaged account that is set up specifically to facilitate charitable giving. You can think of donor-advised funds as kind of like tax-deferred retirement accounts, but with a different goal.

You can set up a donor-advised fund at a qualifying brokerage firm and contribute cash, stocks, and other assets to it. However, once assets are in the account, there are tax consequences for non-qualified withdrawals, so keep that in mind. Legal control of the account is technically managed by the “sponsoring organization,” which is often a charitable arm of the brokerage you use. However, you (the donor) retain advisory privileges and can generally direct where you want the money or assets to be donated to. Assets in a donor-advised fund can remain invested and can grow tax-deferred. Assets can then be transferred (or sold, and then the cash transferred) to qualifying charitable organizations.

The main advantage here is that these funds are tax-sheltered, and allow you to reap an immediate income tax deduction while distributing contributions over time as you see fit. This can be useful in years where you might have windfall income, or to offset capital gains from the sale of assets.

4. Batch donations to high-income years

You can strategically time the charitable contributions you make to minimize your tax bill. Instead of making regular yearly or monthly donations, consider making one batch of larger donations every few years, or just in particularly high income years.

For example, say you've set aside $10,000 per year to donate to charity. If you have few other itemized deductions, you will likely take the standard tax deduction — which means your charitable contributions won't be tax deductible. If you instead donate $30,000 every third year – and itemize in those years — you'll reduce your tax liability in the long run.

Batching can also work another way: suppose there are years in which you receive substantial bonuses, sell appreciated assets, or otherwise have more taxable income than usual. You can consider making more charitable contributions in those high-income/high capital gains years.

5. Utilize employer matching and incentives

Check with your workplace HR department to see if your employer may match charitable contributions, or provide other incentives. This won’t affect your tax situation, but it could potentially boost the impact of your donation. Some employers may also offer perks like paid volunteer hours, where you can volunteer your time for a local charity and still receive standard pay from your employer.

6. Donate privately traded assets

You can typically donate any type of asset, not just publicly traded securities. For instance, you may be able to donate:

• Vehicles

• Privately held stock

• Cryptocurrency

• Real estate

• Tangible personal property such as artwork, jewelry and other collectibles

As with publicly traded assets, you should be able to deduct the fair market value of your contribution while avoiding capital gains tax liabilities. However, putting a price on such assets can be tricky, so consult your personal tax advisor to determine the fair market value of privately held assets.

7. Set up a charitable trust

A charitable trust can be set up to benefit one or more charitable causes. It functions similarly to a private foundation and can be a powerful estate planning tool. The specific benefits vary depending on your tax situation and the type of trust created. But generally speaking, they allow donors to receive tax advantages while providing long-term support to a charitable cause.

Charitable trusts can be created in various ways, but there are two main structures: Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs).

• With a Charitable Remainder Trust, the donor funds the trust and gets an immediate tax deduction. The trust then pays the donor (or other non-charitable beneficiary they designate) a stream of income for a number of years (somewhat like a charitable gift annuity). At the end of the term, the “remainder” (i.e., leftover assets) go to charity.

• A Charitable Lead Trust works in the opposite way. The donor funds the trust, and the charity receives income payments for a specified term. At the end of the term, the leftover assets go to one or more non-charitable beneficiaries (typically family members), providing potential gift and estate tax savings for transferring wealth to heirs.

These trusts are complex financial instruments, so you will need to consult with financial, tax, and legal advisors when setting up a trust.

8. Transfer ownership of a life insurance policy to a charity

If you have life insurance, there may be a few different ways you can utilize it to benefit charitable causes. The specific methods for doing so depend on your life insurance plan and provider.

Some plans include a charitable benefit rider, which is paid out to a charity of your choice when a life insurance claim is processed. With Guardian Life Insurance, charitable benefit riders are included at no additional cost — you just need to select a charity to support.

You can also name a given charity as the beneficiary of your life insurance policy through the use of an irrevocable trust.

9. Take a qualified charitable distribution from your IRA

If you’re over age 70 ½ you may be able to take a qualified charitable distribution from your individual retirement account (IRA). With this process, funds are transferred directly from your IRA to a qualifying charity of your choice.

The advantage is twofold: For one, it won’t result in any taxable income for you (whereas a standard IRA withdrawal may). And two, it satisfies the minimum distribution (RMD) requirements for IRAs, which could help you avoid certain penalties.

10. Donate during your routine investment rebalancing

If you’re someone who actively rebalances your portfolio of investments (or utilizes

Rebalancing is a process in which you buy and sell assets in order to return to your portfolio allocation targets. For example, say you’re using a portfolio with 70% stocks and 30% bonds. If stocks have a very good year, you may find that your portfolio is now 80% stocks and 20% bonds (by dollar value). This would typically prompt you to sell 10% of your equity holdings and purchase more bonds.

However, depending on the investment vehicles you're using, this could create a tax liability. If it's a taxable investment account (as opposed to a tax-deferred IRA account), you could be on the hook for substantial capital gains tax.

If you're already planning on charitable giving, you could instead donate a portion of the long-term appreciated assets directly to a nonprofit organization. Since you aren't selling anything, no taxable event is triggered — and the charity receives 100% of the asset tax-free.