Generosity is ultimately about impact, not taxes. But thoughtful tax planning can sometimes allow the same resources to accomplish more. As year-end approaches, many families are thinking about the ministries, churches, and nonprofit organizations they want to support. The simplest approach is often to write a check or make an online donation. But depending on your age, investments, income, and tax situation, there may be more tax-efficient ways to make that gift.
Here are several strategies worth considering before December 31.
If You’re Over 70½, Consider Giving Directly From Your IRA
For donors age 70½ or older, a Qualified Charitable Distribution, or QCD, can be the single most tax-efficient ways to give.
Instead of withdrawing money from an IRA, depositing it into your bank account, and then writing a check to charity, a QCD allows the money to move directly from the IRA to an eligible charitable organization. In 2026, an individual may make up to $111,000 of QCDs from an IRA. A qualifying QCD is excluded from taxable income and can also count toward a donor’s Required Minimum Distribution. That distinction matters. A traditional charitable gift produces a tax deduction only when the donor itemizes on their tax return. And for most people over 70, their mortgage is already paid off, so their potential to itemize is severely limited. A QCD instead keeps the qualifying IRA distribution out of your taxable income, making it especially useful for retirees who use the standard deduction.
With the QCD you get the benefit of the high standard deduction available to seniors, and you increase the probability of getting the additional $6,000 deduction available to taxpayers over the age of 65. One important limitation: QCDs need to go directly to an eligible charity. They cannot be contributed to a donor-advised fund.
Consider a QCD if you:
- Are at least 70½
- Have retirement savings in a traditional IRA
- Regularly support charitable organizations
- Don’t need all of your IRA distributions for living expenses
- Want to satisfy some or all of your Required Minimum Distribution through charitable giving
Consider Giving Appreciated Stock Instead of Cash
Suppose you own stock that you purchased years ago for $20,000 and it is now worth $50,000. You could sell the stock and donate the cash. But selling it creates a taxable capital gain that increases your tax liability for the year. Another approach is to give the shares directly to charity. For qualifying long-term appreciated securities, a donor can deduct the fair market value of the contribution, subject to applicable charitable-deduction limits, while avoiding realization of the embedded capital gain. This strategy creates an unusual win-win: the ministry receives the full value of the gift, while the donor avoids the tax that would have been triggered by selling the investment.
This idea can be particularly useful if you:
- Own stock, mutual funds, or ETFs with significant unrealized gains
- Have held the investment for more than one year
- Already intend to make a meaningful charitable gift
- Want to rebalance or reduce a concentrated investment position
Consider a Donor-Advised Fund for Larger or Multi-Year Giving
A Donor-Advised Fund, or DAF, can be useful for those who want to give consistently but would benefit from concentrating several years of charitable contributions into a single tax year.
Think of it two separate questions:
- When do I receive the charitable deduction?
- When do I want the charity to receive the money?
A donor contributes cash or other assets to the Donor Advised Fund and receives the charitable deduction in the year of the contribution, subject to applicable limits. The donor can then make grants from the fund to eligible charities over future years. For example, instead of contributing $15,000 per year for three years, a family might contribute $45,000 to a donor-advised fund in year one, and then make $15,000 grants to the organizations of their choosing over each of the next three years. The ministry can still receive support on the donor’s normal schedule. The tax deduction is simply concentrated into one single year.
This “bunching” strategy can be especially valuable when the donor would otherwise receive no benefit from itemizing charitable deductions. By “bunching” the giving into one year, the donor can add the $45,000 to their other itemized deductions in the year of the gift, and this will reduce their tax liability for that year. In the following two years they move back to the standard deduction, where they were originally, and do the charitable giving from the Donor Advised Fund. The total amount of charitable giving remains the same, but the net tax benefit to the donor is enhanced by bunching the charitable deduction into one year.
Don’t Overlook the New Deduction for Some Cash Gifts
Beginning in 2026, taxpayers who do not itemize will be able to deduct up to $1,000 of qualifying cash contributions for single filers or $2,000 for married couples filing jointly. That means even donors who normally take the standard deduction should keep good records of their charitable giving. Contributions to donor-advised funds do not qualify for this particular deduction.
Larger Gifts May Require More Advanced Planning
For families considering a particularly large gift, selling a business, disposing of highly appreciated real estate, or including charity in their estate plan, additional strategies may be worth exploring. These can include Charitable Remainder Trusts, Charitable Lead Trusts, charitable bequests, private foundations, and other planning structures. The goal isn’t to make generosity complicated. It’s to make sure large gifts are structured thoughtfully so that as much of the donor’s resources as possible can accomplish what the donor intended.
Generosity and Good Stewardship Can Work Together
Giving should never be driven solely by the tax deduction. We give because we believe in a mission, want to help people, and want our resources to make a difference. But thoughtful planning can sometimes allow the same level of generosity to accomplish more. Before making a significant year-end contribution, consider asking a simple question: “Is writing a check really the best way for me to make this gift?” For some donors, the answer will still be yes.
For others, a Qualified Charitable Distribution, a gift of appreciated investments, or a donor-advised fund could allow them to support the organizations they care about while making wiser use of the resources entrusted to them. A conversation with one of our tax experts at Monotelo Wealth Partners before year-end can help determine which approach makes the most sense for your situation.
This material is intended for general educational purposes and should not be considered individualized tax, legal, or investment advice. Charitable-giving rules depend on the donor’s individual circumstances, the type of asset contributed, and the organization receiving the gift. Donors should consult their tax, legal, and financial advisors before implementing a significant charitable-giving strategy.
This article is a general communication being provided for informational and educational purposes only and is not meant to be taken as tax advice, investment advice or a recommendation for any specific investment product or strategy. The information contained herein does not take your financial situation, investment objective or risk tolerance into consideration. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel. Any examples are hypothetical and for illustration purposes only. All investments involve risk and can lose value, the market value and income from investments may fluctuate in amounts greater than the market. All information discussed herein is current only as of the date of publication and is subject to change at any time without notice. Forecasts may not be realized due to a multitude of factors, including but not limited to, changes in economic conditions, corporate profitability, geopolitical conditions, inflation or US tax policy. This material has been obtained from sources believed to be reliable, but its accuracy, completeness and interpretation cannot be guaranteed.
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