New rules taking effect in 2026. See the Donor-Advised Funds section below for details.

Why the Way You Give Matters

Most people begin charitable planning by deciding how much they want to give. Once that decision is made, the next question is what to give. A $50,000 gift of cash, appreciated stock, or IRA assets can have very different tax consequences, even though the charity receives the same amount.

Timing can matter as well. If a business sale or a large bonus is expected, it may be worth considering whether to fund several years of planned giving in that higher-income year. These decisions can help families support the causes they care about while coordinating their gifts with retirement spending, investments, and the assets they hope to leave to others.

Choosing Between Cash and Appreciated Assets

Writing a check is familiar and straightforward. But a portfolio may contain investments that have grown substantially since they were purchased. Selling those shares to fund a gift can create a taxable capital gain. Contributing eligible shares directly to a charity can generally avoid realizing that gain while still potentially providing a charitable deduction.

When you donate publicly traded stock you have owned for more than a year to an eligible public charity, the deduction is generally based on what the shares are worth at the time of the gift, rather than what you originally paid for them. The amount you can deduct is subject to tax limits, so the gift should be evaluated in the context of your income and overall giving plan.

Donor-Advised Funds and the Timing of Gifts

A donor-advised fund, or DAF, is a charitable giving account that allows you to set aside assets for charity now and distribute them over time. You contribute cash or investments to the account and may qualify for a tax deduction in that year. You can then decide which eligible charities to support and when they receive the funds. Once contributed, the assets are committed to charity and cannot be taken back for personal use.

This can be useful for a family that gives consistently but has income that varies. Several years of planned contributions can be combined in one year, a practice often called bunching, while donations to individual charities continue on the family’s usual schedule. Appreciated securities may be used to fund the DAF, allowing the family to consider both which assets to give and when to contribute them.

Two New Rules to Know for 2026

The 0.5% deduction floor. Beginning in 2026, taxpayers who itemize generally receive a charitable deduction only for donations above 0.5% of their adjusted gross income. For a household with $500,000 of adjusted gross income, the first $2,500 donated would not be deductible. Put differently, if the household gives $10,000, the remaining $7,500 could be deductible, subject to other applicable limits.

The 35% limit on deduction value. Starting in 2026, taxpayers in the highest federal tax bracket can generally save up to 35 cents in federal income tax for each deductible dollar donated, rather than 37 cents. Giving more in a higher-income year can still make sense, but this limit should be part of the calculation.

Together, these rules make it more useful to compare the actual tax savings across years. Bunching may still help, but the decision should account for the donor’s income, available deductions, and ability to commit the funds upfront.

Hypothetical example for illustration only. Deductibility, valuation, AGI limits, and substantiation requirements depend on the donor’s circumstances and should be reviewed with an external tax professional. The DAF sponsor retains legal control of contributed assets and approves distributions to eligible charities.

Qualified Charitable Distributions From an IRA

For a retiree who already gives to charity, an IRA may offer another way to fund those gifts. Once the IRA owner reaches age 70½, a qualified charitable distribution, or QCD, can transfer money directly from an eligible IRA to an eligible charity. If the requirements are met, the qualifying amount is excluded from gross income. It can also count toward a required minimum distribution, or RMD, once those distributions begin. For 2026, the QCD limit is $111,000 per eligible IRA owner. A married couple could therefore exclude up to $222,000 in total if both spouses qualify and each makes the transfer from their own IRA.

That exclusion can be useful even for someone who does not itemize deductions. Taking a taxable IRA distribution and then writing a check to charity puts the distribution into income first. A QCD generally keeps the qualifying amount out of income, which may also affect Medicare income-related premiums, known as IRMAA. The same gift cannot also be claimed as a charitable deduction, and QCDs cannot fund a donor-advised fund.

Hypothetical example for illustration only. QCD eligibility and tax reporting should be confirmed with the client’s external tax professional.

When a Charitable Remainder Trust May Fit

Some gifts involve several goals at once. A donor may hold a concentrated investment, want an ongoing income stream, and intend to leave a meaningful amount to charity. A charitable remainder trust, or CRT, can be worth evaluating in that situation. Assets are transferred to an irrevocable trust, which makes payments to the donor or other designated beneficiaries for life or a specified term. The remaining assets ultimately pass to charity.

Hypothetical example for illustration only. CRTs are irrevocable and involve setup costs, ongoing administration, and tax reporting. The trust should be designed with an estate attorney and reviewed with the donor’s external tax professional.

The Giving Plan Should Fit the Household

Effective charitable giving strategies connect the causes a family supports with the financial decisions it is already making. A business sale, an approaching RMD, or a concentrated stock position can each create a reason to revisit how a planned gift is funded. Considering these decisions together can help donors make better use of their assets, manage the tax consequences, and preserve resources for other goals. The result should be a giving plan that supports their charitable intentions and remains sustainable over time.

Coordinating the Plan

At Monadnock Private Wealth at Steward Partners, we help bring the investment, retirement, and estate planning decisions behind a charitable gift into one coordinated plan. We work with clients and their tax and legal advisors to evaluate the options, agree on the timing, and help carry the plan through to completion. That coordination helps ensure the gift reflects the family’s wishes while accounting for ongoing spending needs, future income, and the assets they intend to leave to others.

Frequently Asked Questions

What is the most tax-efficient way to give to charity?

There is no single approach that works best for everyone. Charitable giving tax strategies vary from household to household, depending on the donor's assets, income and charitable goals. Strategies to explore can include donating appreciated investments, using a donor-advised fund, making qualified charitable distributions from an IRA, or concentrating gifts in certain years. The appropriate approach should be coordinated with an advisor and external tax professional.

Is it better to donate cash or appreciated stock?

Appreciated stock held longer than one year may be attractive because an eligible direct gift can generally avoid realizing the embedded gain and may qualify for a deduction based on fair market value. Cash may still be appropriate depending on the portfolio, recipient, and applicable deduction limits.

Can I deduct charitable gifts if I take the standard deduction?

Beginning in 2026, taxpayers who take the standard deduction may also deduct up to $1,000 in eligible cash donations, or $2,000 for married couples filing jointly. Contributions to donor-advised funds and gifts of stock do not qualify. For households that give regularly but do not itemize, this can offer a modest tax benefit for charitable support they may already be providing.

What is a qualified charitable distribution?

A QCD allows an eligible IRA owner age 70½ or older to direct funds from an IRA to a qualifying charity. In 2026, up to $111,000 per eligible IRA owner can be excluded from gross income when the requirements are met, making QCDs a strategy worth considering for retirees who already intend to give to charity. Eligibility, transfer instructions, and tax reporting should be confirmed before execution.

Can a QCD be made to a donor-advised fund?

No. Donor-advised funds are not eligible recipients of QCDs. A donor considering both strategies should evaluate which assets will fund each gift.

Can a QCD satisfy my required minimum distribution?

Yes. A qualified charitable distribution can satisfy some or all of an IRA owner's required minimum distribution for the year, provided the applicable QCD requirements are met.

Can charitable giving help in a high-income year?

It may. A donor who already intends to give might concentrate contributions in that year, potentially through a DAF. Beginning in 2026, the analysis should account for the 0.5% deduction floor and the 35% limit on the value of itemized deductions against top-bracket income. Comparing the actual tax savings with a tax professional across years is more useful than assuming the highest-income year is automatically best.

When is a charitable remainder trust worth exploring?

A CRT may be worth discussing when charitable intent is paired with a highly appreciated asset and a meaningful need for income or diversification. The structure should be evaluated with a partnered estate attorney and external tax professional.

Should charitable giving be part of estate planning?

For households with meaningful charitable goals, it often makes sense to consider giving alongside the broader estate plan rather than as a separate decision. Beneficiary designations, charitable trusts and lifetime giving strategies can affect which assets ultimately pass to family and which support charitable organizations, so these decisions should be coordinated with the financial advisor, estate attorney and tax professional.

Start With the Giving You Already Intend

Charitable giving strategies work best when they are coordinated with the rest of your financial plan, not decided in isolation. A quick conversation can help identify which assets, accounts, and timing fit the gifts you already have in mind.

Sources and Important Notes

Sources: 2026 deduction floor; Charitable contributions; IRA distributions; Donor-advised funds; Charitable remainder trusts; 2026 QCD limit; Itemized deduction limitation; Non-itemizer eligibility; Treatment after AGI.

This material is provided for general informational and educational purposes only and is not intended as, and should not be construed as, individualized investment, tax, accounting, or legal advice; an offer or solicitation to buy or sell any security or investment product; or a recommendation to implement any particular charitable, investment, retirement, or estate-planning strategy. The strategies discussed may not be appropriate for every investor, and their suitability depends on individual circumstances, including financial objectives, tax status, liquidity needs, time horizon, and risk tolerance.

Tax laws, regulations, contribution limits, deduction limits, and eligibility requirements are complex and subject to change. The tax treatment of charitable contributions depends on the donor’s specific circumstances and compliance with applicable valuation, substantiation, holding-period, adjusted-gross-income, and other requirements. Monadnock Private Wealth and Steward Partners do not provide tax or legal advice. Consult an independent qualified tax professional and legal or estate-planning counsel before implementing any strategy described.

Hypothetical examples are provided solely for illustrative purposes. They do not reflect actual client results and are not projections, guarantees, or representations of future outcomes. Actual results, including tax consequences, may differ materially.

Donations to donor-advised funds are irrevocable. The sponsoring organization maintains legal control over contributed assets, and grants are subject to the sponsor’s policies and approval. Qualified charitable distributions are subject to statutory eligibility, recipient, transfer, reporting, and annual-limit requirements and must be made directly from an eligible IRA to an eligible charitable organization. Charitable remainder trusts are irrevocable arrangements that may involve significant legal, tax, administrative, and investment considerations. Donating appreciated securities and other assets may involve market, valuation, liquidity, concentration, and tax considerations. Investment values fluctuate, and there is no assurance that any planning strategy will achieve its intended financial, charitable, or tax objectives. Before transferring assets, donors should confirm that they retain sufficient resources to meet ongoing spending needs, reserves, taxes, and other financial commitments.

Monadnock Private Wealth and Steward Partners do not provide tax or legal advice. Tax matters should be reviewed with an external tax professional, and trust and estate matters with a partnered estate attorney or other qualified legal counsel.