Building a Charitable Giving Strategy

There are many different reasons to give to charity: be it for tax benefits, leaving a legacy or supporting a cause you care about.  Whatever your motivation may be, it’s important to think through your philanthropic and financial goals to develop a giving strategy that works for you. Here are five steps to help you set up your giving strategy: 

Outline your giving goals.  What type of cause do you want to support?  What do you hope to achieve through your contributions? How often and how much do you want to give?  Think through important questions like these and write down your answers. Share this document with your financial advisor and use it as a reference to guide your giving strategy.

Understand tax implications.  Charitable giving can help you save on both income and estate taxes, each with their own rules and considerations: 

About income tax benefits - You can generally reduce your taxable income by the value of your charitable donations. However, the type of gift you give, how you give it, and the type of organization you support might effect the size of your deduction.  In addition, your benefit will be limited by a percentage of your adjusted gross income.  However, you may be able to carry forward any unused reductions for up to five years. 

Regarding estate tax benefits - Charitable contributions made both during your lifetime and at death can help reduce your estate taxes.  Unlike income tax benefits, there are no limits to the amount you can contribute or deduct for estate tax purposes.

 Decide on your assets.  Gifting different types of assets offers different types of benefits:

Cash is often the simplest donation to make, but it can also offer the fewest tax benefits. 

Appreciated marketable securities, such as stocks, bonds, and mutual funds, can be claimed for their full fair market value. Plus, you may not have to pay capital gains tax on the appreciation.

Tax-deferred assets, such as retirement accounts, may be something you consider gifting after death.  When left to heirs, tax-deferred assets can incur considerable taxes.  But when left to charities, these assets remain free from income and estate tax. 

                                                         Golden Gate Park, San Francisco, California

                                                         Golden Gate Park, San Francisco, California

Determine how to give.  If you’d like to make an immediate contribution to a charity, a direct gift may make the most sense for you. If your goal is to leave a legacy for yourself or your family, you may consider establishing a private foundation or a donor-operated fund.  Other giving alternatives, such as annuities and trusts, might help you achieve your estate planning goals.  

Review your giving strategy annually.  Like most things in life, your charitable giving circumstance may change over time.  Be sure to check in with your strategy and make any necessary changes at least once a year.  This will help you stay on track with both your philanthropic and financial goals. 


This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.