One of the most meaningful aspects of building wealth is the ability to give back.
Many families and individuals support charitable organizations for personal, community, or faith-based reasons. While generosity is usually the primary motivation, thoughtful charitable giving strategies can also make those gifts more tax-efficient.
For people approaching or already in retirement, especially those who have accumulated investment assets over many years, certain charitable giving methods may let them support causes they care about while also enhancing the tax efficiency of their financial plan.
Below are four tax-efficient charitable giving strategies retirees and pre-retirees may want to consider when thinking about philanthropy as part of their broader financial plan.
Tax-efficient charitable giving strategies are ways individuals can support charitable organizations while potentially reducing taxes related to investments, retirement accounts, or income. These strategies might include:
The four strategies below illustrate different ways charitable giving may intersect with tax and retirement planning.
| Strategy | Potential Benefit | Often Best For |
| Donating Appreciated Investments | May avoid capital gains taxes while supporting a charity | Investors with taxable investment accounts |
| Donor-Advised Funds (DAF) | Immediate deduction with flexibility to give later | Donors who want to organize long-term giving |
| Qualified Charitable Distributions (QCDs) | May satisfy RMDs without increasing taxable income | IRA owners age 70½ or older |
| Charitable Bunching | Combining donations into one tax year may allow itemizing deductions | Retirees near the standard deduction threshold |
The table below highlights situations where each strategy may be worth exploring.
| Strategy | When It May Be Worth Exploring | Potential Benefit |
| Donating Appreciated Investments | You hold investments in a taxable account that have increased significantly in value | May avoid capital gains taxes while supporting a charity |
| Donor-Advised Fund (DAF) | You want to make a charitable contribution now, but distribute funds to charities over time | Immediate tax deduction with flexibility to recommend grants later |
| Qualified Charitable Distribution (QCD) | You are age 70½ or older and taking distributions from an IRA | May satisfy required minimum distributions without increasing taxable income |
| Charitable Bunching | Your annual deductions are close to the standard deduction | Combining multiple years of gifts into one tax year may allow you to itemize deductions |
Several charitable giving strategies may offer both philanthropic and tax advantages. The four approaches below illustrate ways charitable giving can be coordinated with investment assets, retirement accounts, and tax planning considerations.
A slightly more complex strategy than giving cash is donating investments that have appreciated in value. Many retirees hold taxable investments, such as stocks, mutual funds, bonds, or exchange-traded funds, that have grown significantly over time.
Donating these investments directly to a qualified charitable organization may allow you to avoid realizing capital gains taxes while still supporting the cause you care about.
In many cases, donors may also qualify for a charitable deduction based on the fair market value of the asset, subject to IRS limitations (generally up to 30% of adjusted gross income for certain appreciated assets).
Suppose you purchased shares of a company years ago for $10,000, and they are now worth $50,000. If you sell the shares first, you might owe capital gains tax on the $40,000 gain. Instead, if you donate the shares directly to a qualified charity:
Donating appreciated investments can help donors support charitable organizations while potentially avoiding capital gains taxes on the assets being gifted.
If you like the idea of donating appreciated assets but aren't ready to choose specific charitable recipients, a donor-advised fund (DAF) might be worth considering.
A donor-advised fund is a charitable giving account that allows donors to contribute assets, receive an immediate tax deduction, and recommend grants to charities over time. It can also make it easier to donate appreciated investments like stocks, bonds, or mutual funds.
Suppose you own shares of an investment worth $50,000 with significant unrealized gains. Rather than donating the shares directly to a charity today, you could contribute them to a donor-advised fund.
Remember, with a DAF, the tax benefit is given in the year you gift the stock to your DAF, not when you make the charitable grants.
Donor-advised funds may allow donors to receive a current tax benefit while providing flexibility in how and when charitable gifts are distributed.
In some situations, donor-advised funds are also used as part of a charitable bunching strategy, allowing several years of planned donations to be combined into a single tax year.
A common strategy for retirees age 70½ or older is called a Qualified Charitable Distribution (QCD). This method allows individuals to transfer funds directly from an IRA to a qualified charitable organization.
In 2026, people can transfer up to $111,000 annually through a QCD. These transfers can count toward required minimum distributions (RMDs), but the amount transferred is generally excluded from taxable income.
Although the distribution isn't eligible for a charitable deduction, excluding the amount from income may offer several benefits. For instance, it could help lower-income-related Medicare surcharges known as the Income-Related Monthly Adjustment Amount (IRMAA).
Suppose a retiree must take a $40,000 required minimum distribution (RMD) from their IRA. If they instead transfer $15,000 directly to a qualified charity through a QCD, that amount may count toward their RMD while not being included in taxable income.
Qualified Charitable Distributions may allow retirees to support charitable causes while managing taxable income from retirement accounts. And if you've already made a QCD, it's worth reviewing how to report it correctly on your tax return to avoid a costly error.
Many retirees have paid off their mortgage and might have fewer itemized deductions than they did earlier in life. As a result, they may opt for the standard deduction rather than itemizing.
One strategy sometimes considered is charitable bunching, which involves combining several years of charitable donations into a single tax year. By doing so, total deductions in that year may exceed the standard deduction, allowing the donor to itemize deductions.
Instead of donating $10,000 annually for three years, a donor could give $30,000 in one year and itemize deductions that year, while taking the standard deduction in the other years.
Charitable bunching may allow donors to maximize the tax benefit of charitable contributions in certain years.
While charitable giving strategies can offer meaningful benefits, a few common missteps can reduce their effectiveness, including:
Being aware of these details can help ensure charitable gifts align with both philanthropic goals and broader financial considerations.
In some cases, donating appreciated assets like stocks or mutual funds can be more tax-efficient than giving cash. When donors give appreciated assets directly to a qualified charity, they might avoid paying capital gains taxes on the increase in value. Additionally, donors could qualify for a charitable deduction based on the asset’s fair market value, subject to IRS limits.
A Qualified Charitable Distribution allows individuals age 70½ or older to directly transfer funds from an IRA to a qualified charitable organization. These transfers can count toward required minimum distributions and are generally excluded from taxable income.
A donor-advised fund is a charitable giving account that allows individuals to contribute assets, receive an immediate charitable deduction, and suggest grants to charitable organizations over time. These accounts can be funded with cash or appreciated investments and may help donors organize charitable giving across multiple years.
Charitable giving decisions are rarely made in isolation. For many retirees and people nearing retirement, these choices intersect with other aspects of a financial plan, including retirement income planning, tax management, estate planning, and legacy goals.
For example:
Because these strategies interact with other parts of a financial plan, evaluating them within a broader planning framework can help ensure that charitable goals, tax considerations, and long-term financial priorities stay aligned.
Charitable giving can be rewarding for everyone involved: the individuals and organizations receiving the support, as well as the families choosing to give.
With thoughtful planning, charitable gifts can also be structured in ways that align with broader financial and tax considerations. For many retirees and individuals approaching retirement, charitable giving becomes part of a larger conversation about legacy, stewardship, and how their financial resources can reflect what matters most to them.
At Spaugh Dameron Tenny, our planning process is designed to help clients make decisions with clarity and confidence so they can pursue their goals while supporting the causes they care about.
If charitable giving is an important part of your financial life, a conversation with a financial planner can help you explore how these strategies might fit into your overall plan.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax, and accounting advisors as appropriate.
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Jordan Bilodeau, CFP®, CEPA, is the Director of Planning & Strategy at Spaugh Dameron Tenny, where he leads firmwide planning initiatives and helps clients navigate complex financial decisions. With experience in portfolio design, tax strategies, and business succession planning, Jordan works with executives, physicians, dentists, and successful retirees to coordinate every aspect of their financial lives. He holds both the CERTIFIED FINANCIAL PLANNER® and Certified Exit Planning Advisor designations and has a Master’s degree in Wealth and Trust Management, providing tailored guidance for clients.
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