What Issues Should I Consider When Establishing My Charitable Giving Strategy?
A thoughtful charitable giving strategy does more than benefit the organizations you care about—it can help you reduce your tax liability, transfer wealth efficiently, and create a lasting legacy. This checklist walks you through every dimension of building a giving strategy, from clarifying your motivations to selecting the right vehicles and understanding the tax rules.
Foundational Questions
- Have you identified what motivates you to give? Start with your values and causes before selecting vehicles.
- Does your giving align with your values and financial goals?
- Do you have a giving plan that helps you make intentional, impactful decisions and respond to solicitations rationally?
- Have you conducted due diligence on the charities you support? Review mission, leadership, financial health, overhead ratios, and how your gift will be used.
Cash Flow Considerations
- How much can you afford to give? Quantify your giving capacity before committing.
- Is your income fluctuating? Fluctuating income affects the tax incentive and deductibility of gifts. Consider giving more in high-income years.
- Want income back from your gift? Consider a Charitable Gift Annuity (CGA), Charitable Remainder Annuity Trust (CRAT), or Charitable Remainder Unitrust (CRUT) to generate income while benefiting charity.
- Want to benefit charity for a term, then pass assets to heirs? Consider a Charitable Lead Annuity Trust (CLAT) or Charitable Lead Unitrust (CLUT).
Asset Considerations
- Highly appreciated securities held over one year? Donating appreciated securities directly avoids capital gains tax while providing a deduction for the full fair market value. The deduction is generally limited to 30% of AGI (20% for private foundations).
- Other non-cash assets to donate? Understand the valuation rules, deductibility limits, and substantiation requirements before donating non-cash property.
- Traditional IRA and age 70½ or older? A Qualified Charitable Distribution (QCD) of up to $111,000 per year goes directly from your IRA to charity, excluded from income entirely. QCDs can also satisfy your RMD. “First dollars out” rule applies.
- Time and skills to contribute? Services are not deductible, but unreimbursed out-of-pocket expenses incurred while performing services may be deductible.
Tax Issues
- Cash gifts: Must be substantiated by bank statements or written charity confirmation. Gifts of $250+ require a contemporaneous written acknowledgment (CWA).
- Non-cash gifts: Gifts over $500 require Form 8283. Gifts over $5,000 require a qualified appraisal (with exceptions for publicly traded securities). Gifts over $500,000: appraisal must be filed with your 1040.
- Quid pro quo gifts: You may only deduct the amount exceeding the FMV of goods or services received in return. The charity must provide written disclosure for quid pro quo gifts of $75+.
- Want to give now but spread distributions over time? A Donor Advised Fund (DAF) lets you take an immediate deduction and grant to charities over multiple years. DAFs can also be used to “bunch” several years of gifts in a high-income year.
- Deductibility rules: If itemizing, donations subject to 0.5% AGI floor. If taking the standard deduction, you may deduct cash donations up to $1,000 ($2,000 MFJ). Above 20% of AGI, tiered limits of 60%, 50%, or 30% of AGI apply depending on the gift type and beneficiary. Excess deductions carry forward five years.
- Estate tax planning: If your taxable estate exceeds $15 million ($30 million if married), incorporating charitable gifts may reduce federal estate tax liability.
Other Issues
- Do you wish to remain anonymous in your giving?
- Review your gifting history and evaluate impact—are your gifts achieving the outcomes you care about?
- Do you want to restrict how gifted assets are used? Earmark funds for specific causes or initiatives (while ensuring deductibility is maintained).
- Have you made pledge agreements? Consider pre-funding pledges when markets are up.
Download the Charitable Giving Strategy Checklist
Get the complete checklist covering every dimension of charitable planning—motivations, vehicles, asset selection, tax documentation, deductibility rules, and estate planning integration. Use it with your advisor to build a giving strategy that reflects your values and maximizes your impact.