Charitable Gifting Planning Process

In 2024, charitable giving in the United States grew to nearly $600 billion, up 6.3% from the prior year, fueled by stock market gains across individuals, foundations, bequests and corporations (givingusa.org). As we approach year-end 2025, charitable gifts are top of mind for many families.

When advising clients on charitable giving, we focus on the most important factor: How can we help align your capital with your goals and objectives?

For many families, giving charitably is a core value and the IRS has created incentives to support this generosity. From a financial planning standpoint, the key is determining what you want to support, how much you want to give and the most tax-efficient way to structure your gifts.

Understanding the Tax Planning Landscape

The IRS provides every taxpayer a standard deduction of $15,750 ($31,500 for married couples filing jointly in 2025), with an additional deduction if you are over 65 or blind. Deductions help to reduce your income when calculating your tax liability. This becomes your “hurdle rate” for deducting charitable contributions.

Note: With recent tax legislation, taxpayers may be eligible for an “above-the-line” deduction of up to $1,000 ($2,000 for married couples filing jointly) for charitable gifts, so long as the gift is not made to a donor-advised fund or private foundation.

Determining Your Deductible Amount

If you plan to give enough to exceed the standard deduction (while including other potential deductions), you need to consider:

• The type of organization (public vs. private charity)
• Your adjusted gross income (AGI)
• What type of property you’re giving

The following chart provides a helpful reference for allowable itemized deductions based on property type and recipient:

Charitable Deduction Limits

Note: Depreciable property is subject to the lesser of original basis or fair market value for deductibility purposes.

Example: If you want to give $110,000 to a public 501(c)(3) organization:

• Cash gift: You’d need at least $183,334 of AGI to deduct the full amount (60% limit)
• Long-term appreciated securities: You’d need $366,666 of AGI to deduct the full amount (30% limit)

Any excess charitable deduction can be carried forward for up to five years, retaining its character for future use.

Choosing the Best Giving Method

Cash: The majority of donors (64%) give online. Cash contributions allow for the highest AGI deduction limit (60%) and provide immediate, flexible funding for charities. (nptrust.org)

Appreciated Securities: Donating securities held for more than one year allows you to reduce potentially concentrated positions or highly appreciated securities while avoiding capital gains tax. You’ll receive a deduction based on the fair market value (basis if held if less than one year), making this an especially efficient strategy for highly appreciated assets.

Donor-Advised Funds (DAFs): These increasingly popular vehicles now hold over $250 billion in assets (nptrust.org). DAFs are treated as public charities for deduction purposes but allow you to receive an immediate charitable deduction while distributing grants to charities over multiple years. This strategy works particularly well during high-income years.

Qualified Charitable Distributions (QCDs): For individuals over age 70½, QCDs allow you to donate up to $108,000 annually directly from your IRA. These distributions are excluded from taxable income and aren’t subject to AGI limitations. QCDs can also satisfy required minimum distributions.

Charitable Remainder Trusts (CRTs): CRTs function similarly to donor-advised funds, providing a large upfront charitable deduction while allowing the funds to grow. You or your heirs receive an income stream during the trust’s term, with the remainder ultimately going to charity. The year-one charitable deduction is based on IRS tables calculating the remainder interest, subject to AGI limitations.

Private Foundations: Some families choose to establish private foundations to manage their charitable giving. These foundations can make grants to public operating charities but face the most restrictive AGI limits and must distribute at least 5% of assets annually. Both CRTs and private foundations require annual tax filings.

Moving Forward

There are numerous ways to give charitably, and with proper planning, you can take full advantage of current tax laws while supporting the causes you care about most. We welcome the opportunity to discuss your charitable goals and help you implement a tax-efficient giving strategy that aligns with your family’s values.

Your client centric team is ready to help you develop a charitable giving plan. Lets talk.

This article is for informational purposes only and should not be construed as tax, legal, or investment advice. Please consult with your tax advisor, attorney, or Greenleaf Trust advisor regarding your specific situation.