How Charitable Giving Can Be Part of a Tax-Savvy Financial Strategy

When you think about charitable giving, you likely think about the good you can do for others. But thoughtful giving can also be a meaningful part of your overall financial plan — helping you manage your taxes, create a lasting legacy, and support the causes that matter most to you.

For individuals and families with substantial assets, strategic philanthropy isn't just about generosity. It's also about planning carefully to maximize the impact of every dollar.

Here’s how charitable giving can fit into a tax-smart financial strategy — and how to approach it intentionally.

Why Charitable Giving Should Be Part of Your Financial Plan

Many people give reactively — responding to a friend's fundraiser, a year's end campaign, or a natural disaster.

While every gift matters, a more strategic approach can:

• Maximize tax benefits. Properly structured giving can lower your taxable income.

• Align giving with personal values and long-term goals.

• Ensure gifts have a larger, lasting impact.

• Support broader legacy and estate planning efforts.

By planning ahead, you can be both generous and financially wise.

Key Charitable Giving Strategies to Consider

Depending on your situation, there are several ways to incorporate charitable giving into a broader financial and tax strategy:

1. Itemized Deductions for Cash Donations

When you give cash to a qualified public charity, you may be able to deduct the value of your gift from your taxable income if you itemize deductions.

• In general, you can deduct up to 60% of your adjusted gross income (AGI) for cash gifts to qualified charities.

• If your total itemized deductions (including gifts) exceed the standard deduction, giving can directly reduce your taxable income.

Planning Tip: Consider bundling several years’ worth of donations into a single year ("bunching") to exceed the standard deduction and maximize tax benefits.

2. Donating Appreciated Securities

Rather than selling stocks, mutual funds, or other investments and donating the proceeds, you can donate the assets directly to a qualified charity.

Advantages:

• No capital gains taxes on the appreciated asset

• Full fair market value deduction (subject to AGI limits, typically 30% for appreciated assets)

This strategy can be especially useful if you hold highly appreciated securities and are seeking to rebalance your portfolio efficiently.

3. Donor-Advised Funds (DAFs)

A Donor-Advised Fund allows you to make a charitable contribution, receive an immediate tax deduction, and then recommend grants to charities over time.

Benefits:

• Immediate deduction at the time of contribution

• Ability to grow charitable assets tax-free before distribution

• Flexibility to give thoughtfully over years rather than rushing to choose recipients

DAFs are a popular option for families who want to create an enduring charitable tradition without establishing a private foundation.

4. Qualified Charitable Distributions (QCDs)

If you are age 70½ or older, you can direct up to $100,000 per year from your traditional IRA directly to a qualified charity — called a Qualified Charitable Distribution (QCD).

Why it matters:

• Satisfies all or part of your required minimum distribution (RMD)

• Excluded from taxable income (rather than claiming a deduction)

• Can help reduce overall taxable income, which may impact Medicare premiums or other income-sensitive calculations

This is an efficient giving strategy for retirees who don't need their full RMD for personal expenses.

5. Charitable Trusts for Larger Gifts

For individuals considering substantial charitable commitments, trusts can offer advanced planning opportunities:

• Charitable Remainder Trusts (CRTs): Provide income to you or another beneficiary for life (or a term of years), then donate the remainder to charity.

• Charitable Lead Trusts (CLTs): Donate income to charity for a term, then distribute the remainder to your heirs.

Trusts are complex tools that require careful design with your attorney and advisor team but can help balance income needs, tax planning, and philanthropic goals.

Important Considerations for Strategic Giving

Charitable giving can be rewarding — emotionally and financially — but it’s important to approach it thoughtfully:

• Know your goals. Are you looking for immediate tax benefits, long-term impact, or family involvement in giving?

• Document properly. For larger gifts, the IRS requires specific documentation (such as written acknowledgments).

• Understand the limits. AGI limits vary depending on the type of gift and recipient charity.

• Stay compliant. Ensure charities are IRS-recognized 501(c)(3) organizations to claim deductions.

• Coordinate with your team. Tax strategies should be coordinated with your CPA, attorney, and financial advisor to help ensure alignment.

Giving Isn't Just About Taxes

While tax benefits are valuable, they shouldn’t be the sole driver of your giving decisions. Philanthropy is ultimately about making a difference in the world — reflecting your values, beliefs, and passions.

Tax savings are simply a way to stretch your ability to do more good.

How We Can Help

At Kingdom Guard Financial Group, we believe giving is a deeply personal decision — and one that deserves thoughtful planning.

Whether you're considering a simple donation or creating a lasting charitable legacy, we help you integrate giving into a holistic financial strategy, balancing your generosity with your long-term financial security.

Important Disclosure: This material is for general informational purposes only and should not be construed as individual tax or legal advice. Please consult your tax advisor, attorney, and financial advisor for advice specific to your situation.