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3 Charitable Giving Strategies That Deserve a Second Look

Nov 13, 2023 Charitable Giving & Philanthropy

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You’ve established your philanthropic intentions, set your charitable goals, and are ready to start making an impact. Now what? It’s time to learn some charitable giving basics, so you can make the most of your dollars and understand where philanthropy fits in with your overall Private Wealth Design

With that said, we’re going to hit on 3 charitable giving strategies that are often forgotten but can help maximize your financial opportunities. Let’s dive in.

Charitable Strategy #1: Consider donations that are tax-deductible.

Not all donations are tax-deductible. And while writing off a donation is not a “must” for everyone—why not take advantage of this benefit while contributing to the greater good? It’s a win-win. 

The following checklist can help determine if your donations are tax-deductible:

  • Read the fine print- In order to be deductible, gifts must be made to a qualified 501(c)3 non-profit organization. Donations to non-operating foundations are less deductible than donations to public charities and operating foundations. Check with your CPA if you’re considering donating to a non-operating foundation.
  • The gift of tax deduction is a one-way street Gifts made directly to a charity are only 100% deductible if you do not receive any goods or services in exchange for your gift—if you do receive benefits from the charity (for example, meals, entertainment, tickets, books, etc.), subtract the value of those benefits from your charitable contribution to get your deductible amount.
  • Get proof- Request a receipt if you make a donation of $250 or more to a single organization.
  • Get more proof- Invest in an independent appraisal if you are gifting tangible property (artwork, collectibles, etc.) in excess of $5,000.
  • The gift of time- Volunteering is not deductible unless you incur expenses related to volunteering (for example, travel expenses, parking costs, or incidental expenses) that are not reimbursed.

Note: While your gift may be tax-deductible, you will only actually deduct your donation if you itemize your deductions on your tax return; if you use the standard deduction ($13,850 for single filers in 2023 & $27,700 for married couples filing jointly – these will increase to $14,600/$29,200 in 2024), you will not be able to deduct your charitable gifts on top of that amount.

Charitable Strategy #2: Be Strategic About What To Give

Donations can come in a few shapes and sizes, including cash, appreciated securities, and tangible property. It’s important to work with your wealth advisor to determine which form of giving best suits your situation. Below are some of the defining features and regulations that can help you decide:


Cash donations are a simple way to support an organization. The IRS limits your ability to deduct cash donations in a single year to 60% of your adjusted gross income (AGI)—however, you can carry forward unused deductions for five years. 

Appreciated Securities

You can donate appreciated long-term capital-gain assets—such as stocks, bonds, and mutual funds—to a charitable organization. 

By donating shares directly to an organization, you avoid paying capital gains tax and receive a charitable deduction equal to the value of the shares you donated at the date of the transfer. The charity will sell the shares typically on the day it receives the assets and, because it is a 501(c)3 organization, will not pay any tax on the transaction. 

Note: The IRS limits your ability to deduct appreciated security donations in a single year to 30% of your AGI—however, you can carry forward unused deductions for five years. 

Tangible Property

You can donate items to a charitable organization as long as they are in “good” or better condition. 

If the items relate to the charity’s mission—for example, artwork donated to a museum—the items are usually fully deductible. If the property doesn’t relate to the charity’s mission, you may deduct the amount you paid for the property or the property’s current reasonable value, whichever is less. 

Note: While some charities provide guidance on the deductible value, it’s typically up to you to determine the value of an item for tax purposes.  

Charitable Strategy #3: Use the Right Vehicle

If you don’t have a specific charity in mind but you’re intent on giving back, you could up your big-hearted game and donate to a charitable giving vehicle instead. This will allow you to make contributions to various charities through a centralized source. Be mindful that any contribution to these vehicles becomes an irrevocable transfer with the specific intent of funding charitable gifts. 

Here are some charitable giving vehicles you may want to consider:

Donor-Advised Fund (DAF)

A donor-advised fund provides a simple, flexible, and efficient way to manage charitable giving. You receive a tax deduction in the year you make a contribution equal to the full value of the assets you contributed. Contributions can be made at any time during the life of the DAF. 

You can also distribute donations on a flexible timetable (no minimum or maximum annual distribution requirements). Unlike the charitable trusts and private foundation options listed below, you are not required to file a separate tax return for the fund, and establishing a DAF does not require an attorney, meaning DAF’s are generally less expensive to set up and maintain. 

Charitable Remainder Trust (CRT)

A CRT is a tax-exempt, irrevocable trust that first distributes annual income to a named beneficiary for a specified period of time, then donates the remainder of the trust value to a named charity. 

You are required to distribute at least 5% of the trust annually to the named beneficiary. Your tax deduction will be equal to the present value of the remainder interest left to charity. CRTs can be especially beneficial in a high interest rate environment – a higher Section 7520 rate (used to determine the present value of the income distributions over the life of the trust) can lead to a lower present value of payouts and a higher remainder interest (i.e. tax deduction).   

Charitable Lead Trust (CLT)

A CLT is an irrevocable trust that distributes annual income to a named charitable organization for a specific period of time, then transfers the remainder to a named beneficiary (typically family member(s)) at the end of the term, free of gift or estate taxes. 

You may be able to take an upfront tax deduction equal to the present value of the payment stream distributed to the charities, depending on how your trust is structured, however, any future income and gains in the trust will be taxable to you. CLTs are largely an estate planning tool and don’t necessarily provide the biggest bang for your buck as far as charitable deductions are concerned.  

Private Foundation

A private foundation is an independent legal entity established for charitable purposes, governed by one or more individuals, a family, or a company. At least 5% of investment assets each year must be used to support charitable activities or other charitable organizations. 

Although private foundations are exempt from federal income tax, they are required to pay an annual excise tax equal to 2% of net investment income and gains. 

Learn the best strategy for YOU

Let’s get down to brass tacks: charitable giving is in its own way an investment, which is why you should first be familiar with the various opportunities available to you. 

Our team at Monument Wealth Management can help you understand your options and co-create the best charitable giving strategy for YOU. We’ll use our expertise to ensure your charitable giving makes an impact while maximizing the benefits to you.


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