Charitable Giving & Tax Strategies

"I have found that among its other benefits, giving liberates the soul of the giver."
~ Maya Angelou

Why should you consider charitable giving?

As many of us know, giving can be beneficial to both the recipient and the giver. Not only are many charitable organizations dependent on the generosity of donors to operate their services, but the act of giving can be empowering for donors too. In fact, studies suggest a multitude of emotional and physical benefits are tied to giving.¹ In this short article, we’ll explore another way in which charitable giving can benefit donors by way of reducing taxable income.

Who could benefit from charitable giving tax strategies?

As it would seem, a growing number of people could benefit. Americans have given more in the last few years than ever before. Driven by strong financial markets and the resilience of philanthropic support through challenging times, charitable giving in the United States reached a historic milestone in 2025, surpassing the $600 billion mark for the first time to reach an estimated $617.20 billion. This represented a 5.7% increase over the previous year, demonstrating that philanthropic activity remains highly elevated instead of pulling back.²

Learning how to leverage tax strategies as an added benefit to charitable giving, or even as a primary goal, could be important to maintaining high levels of philanthropic giving in the years ahead.

What are some charitable giving strategies?

Below are a handful of strategies that you may find helpful when making your next donation.

1. When making a donation to your favorite charity, consider donating appreciated non-cash assets instead of cash. Donating appreciated securities or other non-cash assets held more than a year means donors can eliminate the capital gains tax they would otherwise incur if they sold the assets and donated cash. Not only that, when filing taxes, donors can claim a charitable deduction for the fair market value of the assets.

   This strategy can also come into play at rebalancing time in a taxable account. Instead of selling positions to rebalance original asset allocation, you can donate shares to reduce or eliminate the taxes you would otherwise owe.

2. Combine tax-loss harvesting with stock donations. Tax-loss harvesting comes into play when you have securities in your portfolio that have declined in value to below the purchase price. You can sell those securities at a loss and offset capital gains and/or up to $3,000 of ordinary taxable income. If you combine stock donations with tax-loss harvesting, you can offset and/or avoid paying capital gains tax while also increasing your tax deductions.

3. When converting a Traditional IRA to a Roth IRA, consider making a charitable donation to offset tax liability. When you convert a Traditional IRA to a Roth IRA, you must pay taxes on the amount withdrawn from a Traditional IRA and converted to a Roth, but a charitable donation can help ease the tax burden by reducing tax liability. See the benefits of Roth IRA’s here: www.schwab.com/ira/roth-ira

4. Offset the tax liability on a retirement account withdrawal. When you withdraw from a tax-deferred retirement account (which should be after age 59½ to avoid an early withdrawal penalty), you will need to pay taxes on this withdrawal. A charitable donation can help offset the resulting tax liability. This strategy can also be applied to Required Minimum Distributions (RMD’s), starting at age 73.

5. Use a Qualified Charitable Distribution (QCD) to fulfill a Required Minimum Distribution (RMD). Instead of having funds distributed to yourself and then paying taxes on that distribution, a QCD to a qualified charity can satisfy the RMD requirement and reduce the taxes you would normally incur on RMD’s. Individuals age 70½ and older can direct QCDs of up to $100,000 per year from their traditional IRAs to charities.

Talk to a financial advisor about which charitable giving strategies could work for you.

This article is for educational purposes only and does not constitute tax advice. Please consult your financial advisor and tax professional before making any decisions.

1. news.harvard.edu/gazette/story/2008/04/money-spent-on-others-can-buy-happiness/
2. https://givingusa.org/giving-usa-charitable-giving-rose-to-617-20-billion-in-2025-surpassing-the-600-billion-mark-for-the-first-time/#:~:text=While%20giving%20by%20corporations%20saw