Charitable Giving | October 25, 2018

The Who, When, What and How of Charitable Giving

by  Meg Gaisford Welborn, GW & WADE COUNSELOR

Many of our clients give to charitable organizations, but may wonder if there are better ways to maximize the impact of their altruistic efforts, both from their own perspective and that of their organization. If you fall into this camp, this post is for you. We explore the Who, When, What and How of charitable giving strategies and discuss the best ways to navigate the recent relevant tax law changes.


The first step is to decide which organization will be the beneficiary of your donation. This is clearly a personal decision and can include considerations such as: whether your values match with the charity’s mission, the percentage of your contribution going directly to the charitable purpose, and whether you want to support an organization that is local or has global reach.

You will then want to more deeply evaluate these organizations. The first step is to confirm that the organization is a charity qualified under Section 501(c)(3) of the Internal Revenue Code. This tells you that your gifts to the organization are eligible to be tax-deductible, the donations received are used for charitable purposes, the organization’s financial information is made public, and that strict rules govern how much it can spend to lobby the government. You can vet your organization in the non-profit database,

You may also be interested in the length of time the organization has been operating, their performance and the efficiency with which the organization puts funds to use. In addition, you can find out the organization’s financial data at


Consider these scenarios as you determine when to make your donation(s):

  • during your lifetime or upon your death
  • annually, directly or from a donor-advised fund (DAF)
  • alternating years - bunching for higher tax benefits   

Once you know the ‘when’, the next step is to ensure that your donated asset is being given away in the most tax efficient way such that the charity and you benefit to the fullest extent possible. For purposes of this discussion, we are going to focus on donations made during your lifetime.


There are three categories of assets that you might consider donating:

  • cash 
  • appreciated publicly traded securities
  • other appreciated assets such as: cash value life insurance policies, personal property such as valuable art, cars/boats, jewelry, royalties, patents and tax-deferred retirement accounts

As referenced above, rather than selling securities to raise the cash for your charitable gift, you may transfer appreciated shares of publicly traded stock or mutual funds directly to the charity’s account. By doing this, in addition to a potential itemized tax deduction, you avoid paying the capital gains tax on a sale of the securities.

Additionally, if you are an IRA owner and you are over 70 ½, rather than making your charitable gifts from a taxable account, consider making a qualified charitable distribution from your IRA. You may transfer up to $100,000 per year from your traditional IRA to a charity. Not only will it be treated as a tax-free distribution, but it will go towards satisfying all or part of your annual required minimum distribution.


With the increased standard deductions, you might think the 2017 Tax Cuts and Jobs Act threw a wrench in your annual giving plans. However, there are still ways to get an itemized tax deduction for your donations.

Under the new tax rules, the standard deduction has increased to $12,000 per person, the itemized deductions for state/local/real estate taxes are capped at $10,000 annually and miscellaneous itemized deductions are eliminated, greatly limiting your ability to itemize. For example, if you are married and file jointly, you would need to have itemized deductions in excess of $24,000 to get a tax benefit for your charitable donation. 

One way to retain the tax benefit of your donation is to use a strategy known as bunching. You “bunch” multiple years of donations in one year so that when combined with your other deductions, you have itemized deductions in excess of the $24,000 standard deduction. The following year, you could switch back to the standard deduction and then alternate based on the amount of combined itemized deductions.

A variation on this theme is to use the bunching strategy described above to make a large donation to a donor-advised fund (DAF).[1] By contributing to a DAF, you will still get the itemized deduction in the year of the donation to the DAF (subject to adjusted gross income [AGI] limitations), but once your DAF is funded, you can make your grants in whatever amounts to your favorite charities in a time frame of your own choosing (e.g., over multiple years).

In the year that you wish to make a large donation, your AGI must be high enough to get the full benefit of the charitable deduction. If you donate appreciated securities, you are allowed to take a deduction up to 30% of your AGI. For cash donations, the limit has been increased from 50% of AGI to 60% under the new tax law.   

For example, if your 2018 AGI were $200,000, then your maximum securities donation deduction for the year would be $60,000 (30% of your $200,000 AGI). Ideally, you would want to time your donation to a high-income year, but you can also carry over your excess donations for the next five years to be taken as future itemized deductions.  

In Conclusion

Well-planned, timely charitable giving ensures the biggest impact for your charity and you. This is why understanding the Who, When, What and How of donating is so important. So, too, is talking with your advisor to help you donate most effectively to meet your charitable objectives and enjoy some personal tax savings along the way.

If you have questions pertaining to your financial situation, please contact us. We welcome the opportunity to help you achieve your long-term financial goals.

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The information provided above is general in nature and is not intended to represent specific investment or professional advice. No client or prospective client should assume that the above information serves as the receipt of, or a substitute for, personalized individual advice from GW & Wade, LLC, which can only be provided through a formal advisory relationship.  

Clients of the firm who have specific questions should contact their GW & Wade Counselor. All other inquiries, including a potential advisory relationship with GW & Wade, should be directed to:

Laurie W. Gerber, Client Development Manager

GW & Wade, LLC



[1] Donor-advised funds (DAF): a charitable giving vehicle administered by a public charity which manages charitable donations for organizations, families, or individuals; an alternative to direct giving or creating a private foundation. Provides administrative convenience and cost savings to donors, by conducting grantmaking through the fund.

Charitable Giving

Meg Gaisford Welborn



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