What Issues Should You Consider When Establishing Your Charitable Giving Strategy?

Many people I work with are charitably inclined but aren’t always sure how to align their resources, priorities, and philosophy in a way that’s both meaningful and financially efficient. A charitable giving strategy isn’t just about deciding if you’ll give—it’s about determining what, when, and how to give so that your generosity has the greatest possible impact on the causes you care about while also fitting into your broader financial plan.

To help you think these issues through, we’ve created a downloadable checklist, What Issues Should You Consider When Establishing Your Charitable Giving Strategy?, which guides you step-by-step through assessing your charitable giving strategy. It covers the full range of issues you should consider, whether you’re establishing a new plan or revisiting an existing strategy.

Here are some of the key themes the checklist addresses:

Clarifying Your Motivations and Goals

Before deciding how much or what to give, it’s important to reflect on your reasons for giving in the first place. Do you want to support a specific cause? Leave a family legacy? Engage your children in philanthropy? By identifying your motivations, we can develop a giving plan that truly reflects your values.

It’s also wise to evaluate the organizations you’re supporting—reviewing their mission, leadership, financial health, and impact—to ensure your donations are making the difference you intend.

Understanding Cash Flow and Timing

Charitable giving should be balanced with your overall financial picture. Some key questions include:

• How much can you afford to give this year? If your income is higher or lower than usual, this can affect the timing of your tax benefits.
• ‍Would you like to make a substantial gift but still maintain an income stream? Options such as charitable gift annuities or charitable remainder trusts allow you to donate assets while still receiving income for yourself or a loved one.
• ‍Would you like your heirs to ultimately retain certain assets? Charitable lead trusts allow you to provide income to charities for a set time, with the remainder eventually passing to your beneficiaries.

Choosing the Right Assets to Give

Not all gifts need to be cash, it should be pointed out. In fact, giving other types of assets can sometimes be more efficient:

• Appreciated securities (like stocks you’ve held for more than a year) can be donated directly, allowing you to avoid capital gains while still taking a deduction for the full fair market value.
• ‍Other non-cash assets such as real estate or business interests can also be donated, though additional rules may apply.
• ‍IRA charitable distributions (for those over age 70½) allow you to direct up to $108,000 annually to charity, reducing taxable income and satisfying required minimum distributions.

Exploring Giving Vehicles

There are several ways to structure your giving depending on your goals:

• Donor-Advised Funds (DAFs): Make a large, deductible gift in one year, then distribute funds to charities over time. This can be helpful for “bunching” contributions to maximize tax deductions. ‍
• Charitable trusts: Depending on whether you’d like to retain or eventually pass assets to heirs, charitable remainder or charitable lead trusts may be appropriate.
• ‍Direct gifts or pledges: The simplest way to make an immediate impact.

Keeping Tax Efficiency in Mind

Charitable giving can also play a valuable role in your tax and estate planning:

• Charitable gifts are deductible if you itemize, subject to limits based on your adjusted gross income and the type of gift.
• Unused deductions can typically be carried forward for up to five years.
• For larger estates, charitable giving can help reduce federal estate tax liability.
• Documentation is key: cash gifts of $250 or more require written acknowledgment, and certain non-cash gifts may require additional IRS forms or appraisals.

Other Considerations

Beyond dollars and tax benefits, you may want to consider:

• Whether you’d like your gifts to remain anonymous.
• If you want to earmark donations for specific programs or initiatives.
• Reviewing your past giving history to ensure your contributions are having the intended impact.
• Contributing your time and skills to causes you care about—while not deductible, it can be just as valuable.

Need Help or an Extra Set of Eyes?

Establishing a charitable giving strategy allows you to give with purpose, maximize tax benefits, and ensure your resources are aligned with your values. I encourage you to download and complete the checklist, What Issues Should You Consider When Establishing Your Charitable Giving Strategy?—it will walk you through each of these considerations in detail. It will also serve to provide a “scorecard” of sorts, which may bring clarity around your current giving strategy and how you may wish to realign it with your passions and priorities.

If, after reviewing it, you’d like to discuss your charitable giving strategy further or have specific questions about your situation, please don’t hesitate to contact me.