5 Tax-Savvy Ways to Give to Charity

Charitable giving is a great way to strengthen your community and contribute to causes that you care about. It can be a very fulfilling act of kindness, but many people are unfamiliar with the different types of charitable giving and their unique tax advantages. Whether you’re donating cash, stocks, or planning for long-term giving, understanding each method’s tax benefits can help you improve your impact while reducing your income taxes.

Please note: The actual tax benefit of charitable giving is dependent on your personal situation and the classification of the charity. Therefore, it’s best to consult with a tax professional and/or the charity prior to giving.

1. Cash Donations

Cash donations remain the straightforward giving method. If you itemize your deductions on your taxes, you can deduct a portion of your adjusted gross income (AGI) for cash donations to qualified charities, with cash gifts generally deductible up to 60% of your AGI. If you take the standard deduction, you may still deduct a limited amount of annual cash contributions to qualifying public charities, up to $1,000 for individuals or $2,000 for married couples filing jointly.

2. Donating Appreciated Stock

Donating appreciated stock, mutual funds, or ETFs can be more tax-efficient than giving cash. When you donate stock held for more than a year, you can avoid the capital gains tax that would be due if you were to sell the stock yourself. Depending on your income. capital gains tax can run you upwards of 20% at the federal level, plus additional state taxes based on where you live. Additionally, if you itemize, you can typically deduct the fair market value of the securities (up to 30% of your AGI), making this an excellent strategy for those holding appreciated investments.

3. Naming a Charity as a Beneficiary

For those unable to donate now and/or looking to leave a legacy, naming a charity as a beneficiary of your life insurance policy, brokerage accounts, or retirement plan can be tax-efficient. Retirement accounts left to heirs are taxable, but when left to a charity, they can be transferred tax free. This can reduce estate tax liability, helping to ensure more of your wealth goes to your chosen cause rather than taxes.

4. Qualified Charitable Distributions (QCDs)

If you’re 70 1/2 or older, Qualified Charitable Distributions (QCDs) allow you to donate directly from your IRA to a qualified charity. You can contribute up to $111,000 per year (2026 limit per individual) directly from your IRA, and these distributions do not count as taxable income. QCDs also satisfy your Required Minimum Distributions (RMDs), making them one of the tax-efficient ways for retirees to give—especially if you don’t itemize deductions.

5. Donor-advised funds (DAFs)

Another option is donating assets to donor-advised funds (DAFs), which allow you to receive an immediate tax deduction and allow for pledged donations over time. Your donated assets are usually managed by a professional investment firm, potentially increasing your charitable impact as your donations grow tax-free. However, DAFs have some considerations such as administrative costs, your donations being irrevocable, and limitations to the organizations you can support.

Planning Your Charitable Giving Strategy

By creating the right giving strategy for your situation, you can significantly reduce your tax burden while making a meaningful contribution. Whether you’re looking for immediate deductions, ways to lower capital gains, or long-term estate planning benefits, charitable giving can be a win-win. If you’re able, we encourage you to give back and make a meaningful impact in your community and around the world.

Please contact your Adage Advisory advisor for personalized help on how to optimize your charitable giving strategy.

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