For most who are charitably or philanthropically inclined, giving is not primarily about the tax benefits; it’s about giving back by supporting the causes and organizations that matter most to them: their faith-based organization, the nonprofit that provides a community lifeline, the scholarship or building fund at a beloved alma mater, or any of hundreds of other worthy organizations that contribute to society in meaningful ways.
On the other hand, though, there’s no reason why meaningful giving can’t be integrated into your overall financial plan in ways that extend the benefits of your philanthropic and charitable efforts. Not only that, but ongoing changes in tax law require that your giving strategy be periodically updated, to make sure that you’re getting (and giving) the most, in the ways that matter most to you and the causes you care about. Not only that, but incorporating your philanthropic interests into your long-term financial strategy can also work to extend the impact of your charitable vision beyond your own lifetime, creating a charitable legacy that your family can continue long into the future.
How do charitable planning strategies fit into my financial plan?
A well-designed financial plan does more than track income, investments, and retirement goals; it reflects what matters most to you. Charitable giving fits naturally into this framework because it connects your financial resources to your personal values.
When giving is planned rather than reactive, it becomes easier to balance generosity with other priorities such as retirement security, family support, and legacy planning. Strategic giving may also reduce taxable income, support estate planning objectives, and provide flexibility in years when income fluctuates. Rather than asking “How much can I afford to give this year?” a thoughtful plan reframes the question to “How can my giving support both my goals and the causes I care about over time?”
How can I set better goals for my charitable giving?
Every effective charitable plan starts with clarity. Before deciding how or where to give, it helps to step back and define your intentions. Some donors are motivated by personal experiences, others by community needs, faith-based missions, or long-term societal impact. There is no single right answer, but having a clear sense of purpose provides direction.
Setting goals may involve deciding which causes matter most, how involved you want to be, and what role philanthropy plays in your overall legacy. For some families, this clarity becomes the foundation for multi-year giving strategies or family conversations about shared values. When your goals are defined, charitable decisions tend to feel more intentional and fulfilling rather than fragmented or rushed.
Are there more innovative ways to give than simply writing a check?
While there is certainly nothing wrong with giving cash to a favorite charity, there are other strategies for giving that may be more effective, both for your financial plan and for the charities involved.
Donating appreciated securities. For example, instead of giving cash, you may wish to give securities from your portfolio. Donating appreciated securities to charity can accomplish two things at once: providing a significant financial boost to the charity and also reducing your personal liability for capital gains taxes on the sale of the securities.
Here’s an example (for illustrative purposes only; your situation may vary):
- Suppose you purchased Stock A for $20,000, three years ago. Today, the stock is valued at $50,000; you have an unrecognized long-term capital gain of $30,000.
- If your income is $613,700 or more (as a married couple filing jointly) and you were to sell the stock, you would owe capital gains tax of $6,000 (long-term capital gains rate of 20%). In addition, you would be assessed a 3.8% Medicare surcharge ($1,140), based on your modified adjusted gross income (MAGI), for a total tax result of $7,140.
- On the other hand, if you donated the stock to charity, it would result in a gift of $50,000. In turn, you would receive a charitable deduction from taxable income that would save you approximately $18,500 in taxes (assuming a 37% tax bracket).
Again, this is only intended as an illustration; you should carefully discuss any such gift with your tax and financial advisors. But this is an example of the type of enhanced impact—both for charity and for your tax return—that is possible by using more innovative techniques for charitable giving.
Using a donor-advised fund (DAF). Another useful and innovative way to support charity is by the use of a donor-advised fund. Donor-advised funds are organizations that accept gifts from donors on behalf of certain charities and then distribute those gifts as directed by the donor. Perhaps the most useful attribute of a DAF is that most can accept gifts in forms other than cash. So, in the example above concerning appreciated securities, the donor might transfer ownership of the stock to a DAF, which can then liquidate the securities and distribute the proceeds to the charity of the donor’s choice. Many DAFs can also accept real estate, collectibles, business interests, and other less-liquid assets, then pass along the value of the assets to qualified charitable organizations.
In 2026, charitable contributors who itemize deductions may only claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their adjusted gross income (AGI). For example, a couple with an AGI of $300,000 can only deduct charitable donations in excess of $1,500. However, many taxpayers use DAFs to “bundle” multiple years’ contributions into a single year. Because they are credited with the entire amount gifted to the DAF, they may be able to access charitable deductions exceeding the standard deduction (in 2026, $16,100 for a single taxpayer, $32,200 for married couples filing jointly). Then, the DAF can distribute the gift to charity over time, as appropriate.
Make a qualified charitable distribution (QCD). In many cases, affluent retirees who are receiving required minimum distributions (RMDs) from traditional (pre-tax) IRAs experience “bracket creep”: they must take a certain amount of money out of the account(s) each year, but this results in pushing them into a higher marginal bracket. One way to address this problem is by making a qualified charitable distribution: instead of sending the RMD to the account owner, the custodian sends it directly to a qualified charity of the owner’s choosing. The QCD amount goes toward satisfying the owner’s RMD requirement for the year, but the amount is excluded from the owner’s taxable income for the year.
How does my charitable giving strategy impact future generations?
Charitable giving can also be a powerful way to pass along values to the next generation. Involving children or grandchildren in discussions about giving helps them understand the purpose of wealth and the responsibilities that come with it. These conversations do not need to be formal. They can start with shared decisions about annual donations or discussions about why specific causes matter to your family.
Over time, philanthropy can become a unifying element of a family’s legacy. When generosity is modeled and discussed openly, it reinforces lessons about stewardship, gratitude, and impact. These lessons often endure far longer than the gifts themselves.
How is tax planning involved in a charitable giving strategy?
Taxes are often a key consideration in charitable planning, and for good reason. When structured thoughtfully, charitable gifts can complement your tax strategy rather than complicate it. Timing gifts to coincide with higher-income years, using vehicles that reduce adjusted gross income (like DAFS or QCDs), or integrating giving into estate planning can all improve overall efficiency.
That said, tax considerations should support, not drive, your charitable decisions. The most effective plans strike a balance between generosity and financial prudence. Working with advisors who understand both your tax situation and your broader goals can help ensure that giving enhances your plan instead of creating unintended consequences.
Again, it is vital, before considering or implementing any of the strategies described above, to spend time with your tax and financial advisors. You need to make sure that you understand all the implications: for your income, for your tax return, and for the charities you are supporting.
At JFS Wealth Advisors, we understand that for many of our clients, support of charitable and philanthropic efforts is a core value shaping financial strategy. We can work with you to develop strategies that both support your most valued causes and your overall financial health. Please get in touch with us to learn more.
