By Marc C. Shaffer
For many families, giving to a church or nonprofit is not just about tax savings. It is about living out values and making a difference.
But the tax rules around charitable giving have shifted in recent years, especially since the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction. As a result, far fewer people itemize their deductions today, which means many donors no longer receive the same level of tax benefit from their cash contributions.
Even if you are not itemizing, there are still smart ways to give that maximize both your generosity and your tax efficiency.
One of those strategies is gifting appreciated assets. Another is bunching multiple years of donations into a Donor Advised Fund (DAF). And for retirees, Qualified Charitable Distributions (QCDs) provide yet another opportunity.
Let’s look at how these approaches work and why they can be powerful tools in your financial plan.
Why Cash Gifts May Not Provide a Tax Benefit
In the past, if you gave $5,000 to your church or favorite charity, you could itemize that donation and reduce your taxable income. Today, the standard deduction for 2025 is $14,600 for single filers and $29,200 for married couples filing jointly.
Unless your mortgage interest, medical expenses, state and local taxes, and charitable gifts combined are higher than those amounts, you will not benefit from itemizing.
That does not mean giving is less meaningful. It simply means the IRS will not reduce your taxable income for most cash donations.
Fortunately, there are strategies to bring back some of those benefits.
Strategy One: Gifting Appreciated Assets
Instead of giving cash, you can donate appreciated assets such as publicly traded stock, mutual funds, or ETFs that you have held for more than one year. This allows you to avoid paying capital gains tax on the appreciation while also giving the full fair market value to the charity.
At Searcy Financial® Services and Allos Investment Advisors, we help many of our clients identify their most highly appreciated assets and then coordinate directly with the receiving institution to transfer the gift.
To ensure their investment allocation continues to match their Investment Policy Statement, we often recommend repurchasing the same security after the gift at the then-higher price. This resets the cost basis, meaning that if the asset is sold in the future, the taxable gain will be smaller, helping reduce future tax liability.
Example 1:
Imagine you bought stock for $2,000 that is now worth $10,000. If you sell the stock, you could owe capital gains tax on the $8,000 in growth. At a 15% tax rate, that is $1,200 in taxes.
- If you sell the stock and donate the after-tax proceeds, your charity receives $8,800.
- If you donate the stock directly, your charity receives the full $10,000, and you avoid the $1,200 tax bill.
- If you then repurchase the stock, your new cost basis is $10,000, which can reduce future capital gains taxes when the asset is eventually sold.
Tax savings: By donating the appreciated stock instead of selling it first, you not only give more to the charity, but you also save $1,200 in avoided capital gains tax. If you itemize, you may also be eligible for a charitable deduction on the full $10,000 gift, creating a double tax advantage. The result: the charity receives more, you avoid current taxes, and your portfolio stays aligned with your long-term investment strategy.
Strategy Two: Bunching Donations into a Donor Advised Fund
Another approach is bunching multiple years of donations into a single year so that you can itemize in that year, then take the standard deduction in the others.
A Donor Advised Fund (DAF) makes this easy by allowing you to contribute a lump sum, often in appreciated assets, receive an immediate tax deduction, and then decide later when to grant the funds to your chosen charities. In the years when clients bunch donations, they also take time to review other charitable giving opportunities. This can include donating tangible goods such as clothing, furniture, and children’s toys to nonprofit organizations.
By aligning both financial and non-financial contributions in the same year, they can further increase their itemized deductions and maximize the overall tax benefit.
Example 2:
Suppose a family typically gives $10,000 per year to charities. Over three years, that is $30,000. By giving $10,000 annually, they fall below the standard deduction threshold and receive no tax benefit. But if they contribute $30,000 to a DAF in one year, they can itemize and potentially reduce taxable income by the full $30,000.
If this family is in the 24% federal tax bracket, that deduction could save them $7,200 in federal income taxes.
They may also include additional non-cash donations in that same year to increase their deduction even further. The money in the DAF remains invested and can continue to grow tax-free until granted to charities in future years. The result: they unlock a significant tax deduction now, while maintaining flexibility in how and when the charities receive support.
Comparing the Three Strategies
Here is a quick side-by-side comparison to see how the numbers and benefits stack up:
| Strategy | How It Works | Tax Savings Example | Key Advantage |
| Gifting Appreciated Assets | Donate securities directly instead of cash | Avoids $1,200 in capital gains tax on an $8,000 gain, plus potential deduction on full $10,000 gift | Give more to charity while resetting cost basis and staying invested |
| Bunching into a Donor Advised Fund | Contribute several years of giving in one year | $30,000 gift in a 24% bracket saves $7,200 in federal taxes | Unlocks large deduction in one year while allowing grants to charities over time |
| Qualified Charitable Distributions (QCDs) | Donate directly from your IRA if age 70½ or older | A $10,000 QCD can reduce taxable income by $10,000 while also satisfying part of your RMD | Support charities while lowering taxable income and managing RMDs |
Extra Credit for Retirees: Qualified Charitable Distributions
For those age 70½ and older, there is another tax-efficient way to give. Qualified Charitable Distributions (QCDs) allow you to donate directly from your IRA to a qualified charity. These distributions can count toward your Required Minimum Distribution (RMD) once you reach age 73, but they are not included in your taxable income. That means you can support your favorite organizations while also lowering your tax bill.
For many retirees, this strategy is one of the most powerful ways to give. We have written a full blog post that explains how QCDs work and the benefits they provide. You can read it here: Making Charitable Giving Easier: Understanding Qualified Charitable Distributions (QCDs)
Bringing It All Together
The tax landscape has changed, but with smart planning, you can still give generously in ways that are efficient for both you and the causes you care about.
Whether you are donating stock to your church, setting up a Donor Advised Fund, or using QCDs in retirement, the key is aligning your giving with your broader financial goals.
At Searcy Financial® Services and Allos Investment Advisors, we believe in helping clients support the organizations they love while also making smart financial choices. If you would like to talk through how these strategies might fit into your plan, we would be happy to help.