Tax Smart Charitable Giving Strategies
Making Your Generosity Go Further
If you are charitably inclined, you do not have to choose between generosity and tax efficiency. With the right strategies, you can support the causes you care about while also reducing your tax burden.
At Windward, we help Kansas City families integrate charitable giving into their overall financial and tax plans. Here are the strategies we discuss most often.
1. Qualified Charitable Distributions (QCDs)
What it is: A direct transfer from your IRA to a qualified charity. The distribution counts toward your RMD but is not included in taxable income.
Who it is for: IRA owners age 70½ and older who do not itemize deductions or who want to reduce taxable income.
Key benefit: Unlike a regular charitable deduction, QCDs reduce your adjusted gross income (AGI). This can help with Medicare premium calculations, Social Security taxation, and more.
Limit: $111,000 per person for 2026 (indexed for inflation).
2. Donor Advised Funds (DAFs)
What it is: A charitable giving account that lets you make an irrevocable contribution, receive an immediate tax deduction, and then recommend grants to charities over time.
Who it is for: Anyone who wants to "bunch" deductions in high income years, donate appreciated securities, or simplify giving.
Key benefit: You can donate appreciated stock directly to the DAF, avoiding capital gains tax while still getting a deduction for the full fair market value.
3. Bunching Strategy
What it is: Concentrating multiple years of charitable giving into a single year to exceed the standard deduction threshold.
Example: Instead of giving $10,000 per year (which might not push you over the standard deduction), you give $30,000 in one year to a DAF, itemize that year, then use the DAF to distribute $10,000 per year to charities while taking the standard deduction in off years.
4. Donating Appreciated Securities
What it is: Giving stocks, mutual funds, or other appreciated assets directly to charity instead of cash.
Key benefit: You avoid capital gains tax on the appreciation AND get a deduction for the full market value. It is like getting two tax benefits in one.
Best for: Assets held more than one year with significant unrealized gains.
The Windward Approach
Charitable giving is not just about generosity. It is about strategy. Our CPA heritage means we look at your giving in the context of your complete tax picture, coordinating with your income, deductions, and retirement distributions.
Want to make your charitable giving more tax efficient? Schedule a Discovery Meeting to discuss your options.
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This content is provided by Windward Private Wealth Management Inc. (“Windward” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. No portion of this blog is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in the individual blog posts will be derived from sources that Windward believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
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