Three Year-End Charitable Giving Ideas

By

Thomas R. Kestler, CFP, CLU, ChFC, CMFC

As we enter the holiday season, many of us consider making charitable donations to a favorite cause or institution. According to the Giving USA report, Americans gave $592 billion to charity in 2024. Many of the donations were significant gifts as opposed to a few dollars here or there. If you are considering making a significant gift, here are three strategies that could help both you and the charity.

Donate Appreciated Assets

We may be approaching the end of the longest bull market in history. Now would be a perfect time to consider donating appreciated assets – like a stock which has grown in value. This would be a great way to support your favorite charity, receive a tax deduction and eliminate a future tax liability. For example, let’s assume you have a stock worth $50,000 with a cost basis (what you paid for it) of $20,000. If you sold the stock today, you would pay capital gains tax on the $30,000 gain. Assuming a 20% capital gains tax rate, the tax would be $6,000.

If you direct your broker to transfer the stock directly to the charity, you get a deduction for the entire $50,000 gift and the charity pays no tax on the subsequent sale. On the other hand, if you want to donate a stock which has suffered a loss, you would be better off selling it yourself and use the loss to offset other gains or generate a deduction for yourself before donating the net cash.

Heap your donations

In 2025, in order to receive a deduction for charitable gifts, above and beyond the standard deduction, you must be able to itemize your deductions. The chart below shows the standard deduction for the various filing statuses.

Filing Status Standard Deduction

Single $15,750

Married Filing Jointly $31,500

Head of Household $23,625

Let’s assume you and your spouse are contributing $10,000 per year to your church. Since this amount is below the Married Filing Jointly standard deduction of $31,500, you will receive no additional deduction other than the standard $31,500. On the other hand, if you were capable of “heaping” the next five years into 2025, you could donate $50,000 before year end and take a deduction for the full amount. Do a quick check with your accountant to make sure the strategy works in your personal situation.

Donate Part of your IRA

In 2015, a minor tweak to the tax law allowed taxpayers over 70 ½ to transfer up to $100,000 annually from their IRA directly to a charity, tax-free. This is called a Qualified Charitable Distribution (QCD). And, like donating appreciated assets, is an extremely efficient way to give to a charity.

Also, when a taxpayer reaches age 73, they are required to begin taking required minimum distributions (RMDs) from their IRA accounts. These RMDs are fully taxable.

In situations where these retirees don’t necessarily need additional income, it may be more tax efficient to have the RMD amount (or more) transferred directly to the charity of their choice as a QCD. This strategy not only satisfies the RMD requirement without generating additional taxable income, but it can also provide a significant gift to your favorite charity.

Making a sacrificial gift to a worthwhile charitable organization can be a game- changer to the organization itself. More likely however, your holiday season will take on a distinctly different feel, knowing that you shared your wealth with those who needed it more.

***

Tom Kestler has been involved in the financial planning field for over 45 years. He is a graduate of Millersville State University and the College for Financial Planning in Denver, Colorado (for which he has acted as an adjunct instructor) and carries the Certified Financial Planner (CFP) designation.

He has also been awarded the Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Chartered Mutual Fund Counselor (CMFC) designations from the American College in Bryn Mawr, PA. He was the founder of Kestler Financial Group, Inc., a firm which specialized in the marketing of financial products and services to over 5,000 independent representatives throughout the United States. Kestler Financial Group was acquired by Highland Capital in 2018.

Mr. Kestler carries Life, Health and Variable Products licenses in several states and provides consulting services to insurance companies on product design and development. He also acts as an expert witness in securities and insurance litigation cases.

Prior to his retirement, Tom served as VP Advanced Sales at Highland Capital, and also CEO of Branch Development Partners, an Office of Supervisory Jurisdiction (OSJ) for Securities America, Inc. (now Osaic), an independent securities broker/dealer.

Tom will be teaching an upcoming Financial Wellness Course— stay tuned for more details! In the meantime, if you have a question for Tom, please post it in the Comments box below.