Charitable giving continues to be a powerful way for individuals and families to make an impact. In 2024 alone, Americans gave an estimated $592.5 billion to charity, with individuals contributing more than $392 billion.[1]
As year-end approaches, it’s an ideal time to look beyond simply making a donation and consider how your giving fits into your broader financial goals, tax picture, and the legacy you want to create.
Whether you give every year or are beginning to think more intentionally about philanthropy, ask yourself: Is the way I give still the right fit for what I want to accomplish?
Key Takeaways
- Year-end is an opportunity to review your giving strategy and make sure it still aligns with your financial goals, tax picture, and values.
- How you give matters. Cash, appreciated assets, donor-advised funds, QCDs, and other strategies may offer different financial and tax considerations.
- Charitable giving can be part of a broader legacy plan, helping individuals and families create a lasting impact across generations.
- Planning early matters. Coordinating with your financial, tax, and estate planning professionals can help you approach year-end giving more intentionally.
Why Should You Review Your Charitable Giving Strategy Before Year-End?
A lot can change over the course of a year. Your income may look different. Your investments may have appreciated. You may have experienced a business or liquidity event, entered retirement or begun taking Required Minimum Distributions (RMDs).
Your priorities can change, too.
Perhaps there are new organizations you want to support. Maybe you want to involve your children or grandchildren in your family’s giving. Or you may be thinking more seriously about the legacy you want your wealth to create.
The end of the year provides a natural opportunity to bring those conversations together.
What Should You Consider Before Making a Charitable Gift?
Before deciding how much to give, consider how charitable giving fits within the rest of your financial plan.
Has your financial situation changed?
Start by looking at the year you’ve had financially.
Changes in income, bonuses, capital gains, retirement distributions or a major liquidity event may affect the charitable strategies available to you.
For some individuals, a straightforward cash contribution may make sense. For others, there may be opportunities to give in ways that better complement their financial circumstances.
Are you giving the right assets?
Cash may be the easiest asset to donate, but it isn’t always the only option.
For example, individuals who own investments or property that have appreciated substantially may want to discuss whether donating appreciated assets directly to a qualified charity makes sense. Depending on the circumstances, doing so may allow the donor to support a charitable organization while potentially avoiding capital gains taxes associated with selling the asset first.
Other strategies may include donor-advised funds, Qualified Charitable Distributions, charitable trusts, and private foundations.
We’ve explored these approaches in greater detail in our previous article, Charitable Giving Strategies to Support the Causes You Care About.
How Can Retirees Incorporate Charitable Giving Into Their Plans?
For individuals in or approaching retirement, charitable giving can become closely connected with retirement income and tax planning.
One strategy available to eligible IRA owners is a Qualified Charitable Distribution (QCD), which allows funds to be transferred directly from an IRA to an eligible charitable organization.
For those subject to RMDs, an eligible QCD can count toward the annual distribution requirement while keeping the transferred amount out of taxable income.
This is one example of why it can be helpful to consider charitable giving alongside the rest of your financial plan rather than as a separate year-end decision.
How Can You Make Charitable Giving Part of Your Legacy?
For many families, creating that legacy is a driving force behind a more structured approach to philanthropy. In fact, 55% of families that use a foundation as their primary giving vehicle cited establishing a long-term philanthropic legacy as a reason for doing so.[2]
You may want to involve children or grandchildren in deciding which organizations to support. You may want your giving to continue beyond your lifetime. Or you may reach a point where a more structured approach, such as a donor-advised fund, charitable trust or private foundation, deserves consideration.
The whitepaper notes that DAFs and private foundations can provide additional flexibility for longer-term philanthropy. Private foundations, in particular, can offer greater control and opportunities for multigenerational involvement and family governance.
The question then begins to shift from “How much do we want to give this year?” to “What do we want our giving to accomplish over time?”
When Does Charitable Giving Become Charitable Stewardship?
As a family’s philanthropic goals grow, so can the complexity surrounding them.
Families may find themselves evaluating charitable vehicles, establishing a foundation, involving the next generation, or serving on nonprofit boards and investment committees. At the organizational level, foundations and endowments must also consider how investment strategy, spending, governance, and mission work together.
That’s where thoughtful giving begins to evolve into long-term stewardship.
Prime Capital Endowments & Foundations works with foundations, endowments, nonprofit organizations, and philanthropic families to help align capital, mission and governance. The offering brings together institutional investment management, mission and impact strategy, and foundation governance and philanthropic strategy.
For philanthropic families, that can include donor-advised fund evaluation, charitable planning, family philanthropy, succession, and next-generation engagement.
Learn more about Prime Capital Endowments & Foundations; visit our website or download our brochure here.
What Should You Do Before The End of The Year?
Start by reviewing what you want your giving to accomplish.
Consider the organizations and causes that matter most to you, the assets available to fund your gifts, your current income and tax situation, and whether your charitable plans still align with your family’s broader financial and legacy goals.
Then, bring the right people into the conversation. Your financial advisor, tax professional and estate planning attorney can help you understand how different decisions may work together within your overall financial plan.
Because ultimately, charitable giving isn’t only about what you give.
It’s about making sure your generosity reflects your values, supports your financial goals and creates the impact you want to leave behind.
Take a Deeper Look at Year-End Giving
Charitable planning can take many forms, and the appropriate strategy will depend on your individual circumstances.
Our Year-End Giving: Create a Lasting Impact whitepaper takes a deeper look at charitable giving strategies, including appreciated assets, donor-advised funds, charitable trusts, Qualified Charitable Distributions, and other considerations that may help you approach your giving more intentionally.
Download the Year-End Giving Whitepaper
Ready to make your giving more intentional?
If you have questions about your specific circumstances or how charitable giving may fit into your broader financial plan, give us a call today.
Source
[1] https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
[2] https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
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. PCIA: 6201 College Blvd., Suite 150, Overland Park, KS 66211. PCIA doing business as Prime Financial | Wealth | Retirement | Wellness | Family Office | Tax Advisory | Endowments & Foundations. Tax planning and preparation services are offered through Prime Capital Financial Tax Advisory.
