Smart Strategies for Charitable Giving

BM_9_strategic giving

 Yes... feeling good can also be financially-wise!

Many people enjoy the idea of donating assets to charity. Not only does it make a person feel better about themselves, but it can also prove to be financially prudent. Donating to charity can reduce the amount of estate taxes that need to be paid upon death and can increase the amount of itemized deductions that can be taken on an income tax return. It is important to develop and implement a plan for charitable giving, so it can be determined how to efficiently transfer assets to charitable organizations.

There are several different strategies for how assets should be transferred to charities. Some strategies include;

  • Making a qualified charitable distribution from an IRA required minimum distribution (RMD)
  • Donating highly appreciated assets
  • Establishing a donor-advised fund

Qualified charitable distribution from IRA

A qualified charitable distribution is defined as the withdrawal of funds from an IRA required minimum distribution with intentions of donating directly to a qualified charity. Utilizing a qualified charitable distribution without itemizing can help to satisfy a required minimum distribution from an IRA. To receive credit for a qualified charitable distribution, the distribution must be sent directly to a charitable organization from the IRA custodian and must be a 501(c)(3). Charities that cannot receive qualified charitable distributions are private foundations and donor-advised funds.

Donating highly appreciated assets

Many people consider making donations by cash or a check, however, it can be a smarter strategy to contribute stocks, bonds, and mutual funds that have appreciated in value over time. A higher charitable deduction may be easier to obtain with securities than liquid cash.  Many publicly traded securities that have unrealized long-term capital gains can be donated to charity without selling them first. The fair market value of the securities can be claimed as an itemized deduction of up to 30% of the adjusted gross income of the donor. It also helps to keep the donor from owing capital gains taxes since the securities were donated and not sold.

Establishing a donor-advised fund

A donor-advised fund is a branch of a public charity that allows donors to contribute to a charity, obtain eligibility to take an immediate income tax deduction, and choose when and how they wish to distribute funds from the donor-advised fund to other charitable organizations. A donor-advised fund can be an excellent strategy for a person who needs a larger deduction in one year, get an immediate tax deduction, and then choose which charities will be supported whenever you are ready. It works best when a person has unexpectedly high earnings or higher year-end bonuses because it can help to offset tax implications.

The most important piece of advice to consider whenever donating to charity is to plan out your charitable contributions to ensure that they can be made in a tax-advantaged way. As with many other aspects of estate and tax planning, it would be recommended to consult a financial professional that can advise you how to allocate your funds and maximize benefits.



Dixon, A. (2018, August 20). All About Qualified Charitable Distributions. Retrieved from Smartasset:

Mary, K. (2018, September 26). Smart Strategies for Giving to Charity. Retrieved from Kiplinger:

Strategic Giving. (n.d.). Retrieved from Vanguard Charitable:

Year-end strategies for charitable giving. (2018, December 20). Retrieved from Fidelity:

Braun-Bostich & Associates, Inc.

Do you know your Risk Number? It may surprise you.

Take advantage of a No-Obligation Review of your finances, or for those close to you.

Schedule a call with a BBA Advisor to ask questions or discuss timely topics.

More Content Courtesy of

Braun-Bostich & Associates, Inc.