Charitable giving is a creative way to not only make a difference to the causes you care about, but it can also play an important part in your financial planning. With the right strategy, you can support the organizations that matter most to you and benefit from potential tax advantages. As we approach the holiday season, when giving is often top of mind for many people, we outline several giving strategies that can help you make the most of your contributions.
Simple Ways to Give
Bequests or beneficiary designations are one of the easiest paths to giving. Through your will or trust, you can leave a specific asset, a percentage of your estate, or the remainder after other distributions. Be aware that you can give the gift only if certain conditions are met, such as if the recipient outlives the testator.
Another option to consider is naming a charity as a beneficiary on financial accounts, like life insurance policies, IRAs, 401(k) plans, or bank accounts. These designations are easy to update and they provide a direct way to fulfill your charitable intentions.
You can also make charitable gifts during your lifetime by donating appreciated securities that have increased in value, including stocks, bonds, or mutual funds. This strategy allows you to avoid capital gains taxes while still receiving a charitable deduction by transferring the securities directly.[1]
Qualified charitable distributions (QCDs) from an IRA are another efficient giving strategy for retirees. If you’re 70½ or older, you can direct up to $108,000 per individual in 2025 from your IRA to a qualified charity. This distribution counts toward your required minimum distribution (RMD).[2] Still, it is excluded from taxable income, making it a smart option for those looking to support charitable causes in a tax-efficient way.
More Complex Ways to Give
If you’re someone who is interested in more advanced planning to align philanthropic contributions with long-term financial and estate benefits, there are several strategies to consider. Through donor-advised funds (DAFs), you can make a charitable gift, receive an immediate tax deduction, and recommend grants to organizations over time.[3] They’re flexible, easy to manage, and can simplify multi-year giving plans.
Charitable gift annuities and charitable trusts provide additional opportunities to structure your giving while maintaining an income stream. This requires you to make a lump-sum donation to a charity in exchange for fixed payments for life with a charitable gift annuity. A charitable remainder trust (CRT) offers a similar balance by providing income to you or your beneficiaries for a specified period, with the remainder ultimately going to a designated charity. A charitable lead trust (CLT) works in the opposite direction, sending income to a charity for a defined term before returning the remaining assets to you or your heirs.
Other techniques, such as establishing a retained life estate, allow you to donate a future interest in your home while continuing to live there. You receive a current tax deduction, and the charity ultimately benefits from the property. Additionally, establishing an endowment can make a lasting impact. Your gift continues to grow while providing annual support to specific causes, such as your parish, school, or other organization you hold dear.
Work with Professionals You Trust
We recommend you work with a financial advisor, tax professional, and estate planning attorney to determine what charitable giving strategy aligns with your long-term goals. Our team is passionate about helping investors like you support the organizations dear to them while also creating a lasting legacy for their future. If this sounds like a strategy you’d like to explore, let’s talk.
This information does not constitute legal advice. Prime Capital Financial and its associates do not provide legal advice. Individuals should consult with an attorney regarding the applicability of this information for their situations. Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. Tax planning and preparation services are offered through Prime Capital Tax Advisory. PCIA: 6201 College Blvd., Suite 150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness | Family Office | Tax Advisory.
[1] https://www.fidelitycharitable.org/giving-account/what-you-can-donate/donating-stock-to-charity.html
[2] https://www.fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html
