Year-End Philanthropic Planning

After clarifying your philanthropic goals and reviewing your financial picture, it’s important to consider the most effective vehicles through which to make your charitable gifts. Different options—such as direct donations, donor-advised funds, charitable trusts, or Qualified Charitable Distributions—offer distinct advantages depending on your tax situation, giving timeline, and long-term objectives. Evaluating these vehicles carefully allows you to efficiently executive your giving strategy.

When planning your year-end contributions, it may be worthwhile to consider donating appreciated stocks, ETFs, or mutual funds directly to charity, as this approach can be more tax-efficient than giving cash. By contributing these assets, you may avoid capital gains tax on the appreciation, claim a deduction for the fair market value of the securities, and potentially extend your charitable capacity without increasing out-of-pocket expenses. This strategy can be especially advantageous in years of strong market performance, making it an option worth evaluating as part of your overall financial plan.

A donor-advised fund allows you to make a charitable contribution now, receive any tax benefit immediately, and recommend grants to charities over time, offering a flexible and strategic approach to year-end giving. DAFs can help you bundle simplify administration and potentially benefit from investment growth within the fund, all while supporting multi-year giving plans. They also provide a meaningful platform for involving children and grandchildren in philanthropic decision-making.

For individuals age 70½ or older, Qualified Charitable Distributions from IRAs offer a highly tax-efficient way to support charitable causes. A QCD can satisfy all or part of your Required Minimum Distribution while being excluded from taxable income, providing a meaningful benefit even if you do not itemize deductions. Because the distribution must be made directly from your IRA to a qualified charitable organization before year-end to count for the current tax year, this strategy is worth evaluating early to ensure your gift is processed on time.

Year-end provides a natural opportunity to review your estate plan and ensure your long-term philanthropic goals are fully integrated with your financial and charitable strategies. This may involve updating charitable bequests in your will or trust, revising beneficiary designations, or reviewing plans for charitable trusts, private foundations, or other family legacy vehicles. By aligning your estate plan with your year-end giving objectives, you can create a lasting impact for the causes you care about.

Year-end philanthropic planning provides an opportunity to thoughtfully consider how to involve your family in giving and create lasting traditions. Reflect on shared values, explore the causes that matter to each family member, and think about ways younger generations might participate. By intentionally considering their involvement, you can strengthen family bonds and help establish a legacy of generosity that endures for years to come.

A well-structured philanthropic plan can enhance tax efficiency, deepen your community impact, and reinforce your legacy. Your wealth advisor can help you determine the most effective strategies based on your goals, financial situation, and timeline.

If you’re considering year-end charitable giving and want guidance on maximizing both impact and tax benefits, our team is here to help.