Strategies for Charitable Giving this Holiday Season
Four ways to support your favorite charities that fit into a smart tax-planning strategy.


The holidays are a popular time of year to give to charity. We are in a good mood, feeling generous and may also be looking for ways to lower our taxable income before the end of the year. However, this incentive only applies if you itemize your deductions.
The Tax Cuts and Jobs Act nearly doubled the standard deduction, and as a result, fewer people are itemizing their taxes. However, there are ways to donate to charity and still reap a reward.
Donor-Advised Funds
Donor-advised funds are growing quickly in popularity. Contributions totaled more than $37 billion last year, and there has been an 86% increase in donor-advised fund contributions over the past five years. Your contributions are invested and grow tax-free until you choose to donate to a qualified charity.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
There are some considerations with donor-advised funds; many have minimums to set up as well as minimums on subsequent donations. Donations made to donor-advised funds are irrevocable. You’ll also want to keep an eye on the fees you’re being charged. Depending on your situation, a donor-advised fund could help you exceed the standard deduction, which is $12,200 for single filers or $24,400 for married couples filing jointly, allowing you to itemize your deductions at tax time.
Bunching
Instead of giving to charity every year, you can save your donations and give twice as much every other year. For example, let’s say you donate $10,000 to charity every year. If you started bunching this holiday season, you would wait to make that donation and take the standard deduction on your 2019 taxes. Then in 2020, you would donate $20,000 ($10,000 for 2019 and the $10,000 for 2020) and itemize your taxes that year.
Bunching may or may not work for your personal situation, depending on how much you plan to donate and how close you are to having enough deductions to exceed the threshold for the standard deduction. This strategy may also play in your favor if you’re donating to a donor-advised fund. Consider front-loading two years’ worth of donations and contributing to a donor-advised fund this year. Take as many itemized deductions as you can this year, and take the standard deduction next year.
Required Minimum Distributions
Even if you’re not planning to itemize your taxes, you can reduce your taxable income by using your required minimum distributions, or RMDs, to give to others. If you’re over the age of 70½, your deadline to take distributions from your tax-deferred retirement accounts is likely the end of the year. You can transfer untaxed money straight from your IRA to a qualifying charity, including non-profits and religious organizations. It’s better to transfer the money directly to avoid paying taxes on the withdrawal; if you withdraw the money first and then write a check to a charity, you will owe the IRS.
A reminder for retirees: Whether you use your RMDs for charitable giving or something else, do not forget to take them! If you miss your deadline, you could get hit with a 50% penalty on the amount you should have withdrawn. Talk to your financial adviser to determine how much you need to withdraw and your deadline, or consider trying an easy online calculator, like this one.
Donating Stock
Donating stocks, bonds, mutual funds or real estate can be a beneficial tax strategy. You can donate appreciated investments as long as you have owned them for more than a year. When you donate appreciated investments directly to a charity, you avoid having to report the gains as taxable income. The tax benefits can really add up, especially if the donation is worth $1,000 or more. Again, be sure to consult your tax professional and financial adviser before donating stock to charity.
No matter the time of year, I encourage my clients to think about charitable giving all year round. Not only is it a useful tax strategy in retirement, but donating to charity also helps your community. You should have a comprehensive written retirement plan that spells out all of your expenses, including charitable giving. And, finally, it’s a good idea to stress test your nest egg before you make charitable donations to make sure you are not at risk of running out of money.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.
-
Don’t Miss Apple and Walmart Back-to-School Tax-Free Holiday Savings this Summer
Sales Tax Select states host sales tax holidays during the summer. Here’s what you can purchase.
-
The Rule of Retirement Inversion
The rule of retirement inversion says that to have a great retirement, you must ask yourself what would ruin a great retirement — and then plan to avoid it.
-
A Financial Planner's Prescription for the Headache of Multiple Retirement Accounts
Having a bunch of retirement accounts can cause unnecessary complications. Consolidation can make it easier to manage your savings and potentially improve investment outcomes.
-
A Guide to Personalizing Your Retirement Plan for Maximum Impact
This strategy challenges conventional retirement rules of thumb by combining traditional savings, home equity and annuities to provide higher income and liquid savings and help cover long-term care costs.
-
Take It From a Tax Attorney: This Is a Magic Multimillion-Dollar Tax-Saving Strategy
The qualified small business 1202 stock exemption is a $10 million exclusion that seems too good to be true and is often overlooked.
-
Seven Financial Considerations When Downsizing for Retirement
With prices going up on everything, you may be looking for a cheaper place to live. To truly evaluate costs, take a hard look at taxes and intangibles.
-
New SALT Cap Deduction: Unlock Massive Tax Savings With Non-Grantor Trusts
The One Big Beautiful Bill Act's increase of the state and local tax (SALT) deduction cap creates an opportunity to use multiple non-grantor trusts to maximize deductions and enhance estate planning.
-
Five Big Beautiful Bill Changes and How Wealthy Retirees Can Benefit
Here's how wealthy retirees can plan for the changes in the new tax legislation, including what it means for tax rates, the SALT cap, charitable giving, estate taxes and other deductions and credits.
-
'Drivers License': A Wealth Strategist Helps Gen Z Hit the Road
From student loan debt to a changing job market, this generation has some potholes to navigate. But with those challenges come opportunities.
-
I'm an Investing Expert: This Is How You Can Invest Like Warren Buffett
Buffett just invested $15 billion in oil and gas, and you can leverage the same strategy in your IRA to potentially generate 8% to 12% quarterly cash flow while taking advantage of tax benefits that are unavailable in any other investment class.