Five tips for year-end charitable giving

This is one of the most important times of year for charitable fundraising. Nearly a third of all donations are made during the month of December.1 There’s nothing like a deadline to motivate, and the end of a tax year often gives us that much-needed nudge to make a donation!

With that in mind, here are five tips when considering your year-end charitable giving. 

Do you own appreciated stocks?

Share some of that wealth with your favorite charity while managing risk within your portfolio. If you have one or two stocks that have done especially well over the years, they may now represent a larger proportion of your portfolio than is prudent. Selling the stocks could entail a large capital gains tax. Gifting some shares to charity instead may help you avoid the tax while reducing the holding to something more reasonable and getting the added benefit of a tax deduction.

Retiring soon?

Consider using a Donor Advised Fund (DAF) now to pre-fund your future charitable gifts before your tax bracket declines. A DAF is like a charitable savings account that you contribute to now to maximize the tax advantage. You can then make your annual gifts for years into the future. This allows you to offset your current taxable income prior to retiring when you may have less taxable income. This can also be a useful way to offset a spike in your taxable income related to a business or residence sale, bonus payments, exercise of stock options or a Roth conversion.

Already 70½?

Uncle Sam now requires you to take minimum distributions (RMDs) from your retirement account, which flows through your tax return as ordinary income. Recent tax law changes have made permanent the ability to directly gift up to $100,000 from your IRA to charity, including the amount needed to satisfy the RMD.2 We refer to this as making a Qualified Charitable Distribution (QCD). Doing so allows you to exclude the distribution from your income on your federal tax return. Depending on your situation, this may help preserve some of your deductions, which otherwise are subject to phase-out rules, reduce income-based Medicare premiums or limit the impact of the Alternative Minimum Tax (AMT).

Want to do more, but feel a bit strapped after all that holiday shopping?

Your favorite charity may have a monthly giving program. This can allow you to spread your gift out over the year and likely give more as a result. These programs are set up as an autopay from your checking account, making it easy to do and giving you the good feeling that comes from being charitable throughout the year!

Don’t procrastinate much longer

Some of these strategies may take some time to plan out and process, so don’t leave it too long. You don’t want to wait until the end of December only to find that you’ve run out of time.

Check with your wealth advisor and tax accountant to discuss the pros and cons of these giving strategies. There are numerous variables and rules to consider when determining the best method for making charitable gifts that are beyond the scope of this article.


James Sonneborn, CFP, CFA, MBA

James Sonneborn, CFP, CFA, MBA

Partner, Wealth Advisor

Jim has over 35 years of experience managing investment portfolios and providing financial advice to individuals, families and charitable organizations in the New York metropolitan region.

As a Wealth Advisor and Co-Chair of the Firm's Neighborhood Nonprofits Group, Jim works with a wide range of clients and has a particular specialty in philanthropic strategies. For donors, Jim works to construct strategies that align with the client's philanthropic goals. In the nonprofit sector, Jim focuses on helping organizations strengthen their financial position through endowment management and planned giving consulting. Jim currently serves on the boards of The Rippel Foundation and the Environmental Endowment of NJ.

Jim holds a BA in Business from Western Colorado University and an MBA in Finance from Drexel University, as well as the CERTIFIED FINANCIAL PLANNER, Chartered Financial Analyst and Certified Divorce Financial Analyst certifications.


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