Charitable Giving: How to Make the Most of What You Give

By Peter Shammas, CFP® · September 26, 2026

If charitable giving is already part of your life, the way you give deserves a place in your financial plan.

Writing a check may be convenient, but choosing a different account, donating an investment, or adjusting the timing could help you support the same causes while paying less in taxes.

For people approaching retirement or already retired, I’d start with four strategies: donating appreciated investments, bunching contributions, using a donor-advised fund, and making qualified charitable distributions.

They can work together, and the best combination may change as you move through retirement.

1. Donate investments with a low cost basis

You may own stock, an ETF, or a mutual fund that has grown substantially since you purchased it. Your cost basis generally reflects what you paid, adjusted for items such as reinvested distributions. A low basis relative to the investment’s current value means a larger potential taxable gain when you sell.

If you already intend to give to charity, those shares can be useful.

Donating appreciated investments held for more than one year directly from a taxable brokerage account to an eligible public charity generally allows you to avoid realizing the capital gain. If you itemize, you may also qualify for a deduction based on the investment’s fair market value, subject to the applicable limits. [1]

For example, suppose shares you purchased for $4,000 are now worth $10,000.

Selling them would realize a $6,000 gain. At an assumed 15% federal long-term capital gains rate, that creates $900 in federal tax, before considering state taxes or other potential taxes.

Donating the shares directly allows the full $10,000 to go to charity without you realizing that gain.

You can also use this approach to reduce an oversized investment position. Or, if you still want to own the investment, you could use the cash you otherwise planned to donate to purchase replacement shares with a new, higher cost basis.

The transfer needs to happen before you sell. Donating the cash afterward does not erase the gain.

2. Bunch several years of giving into one year

Many people donate consistently but receive a limited tax benefit because their itemized deductions do not exceed their standard deduction.

“Bunching” means concentrating several years of planned contributions into one tax year. A larger donation may make itemizing worthwhile that year, while you take the standard deduction in other years.

For example, if you normally give $5,000 annually, you could consider contributing $15,000 in one year to cover three years of planned giving. Whether that helps depends on your other deductions, income, and the rules that apply to your gifts.

Beginning in 2026, itemizers can generally deduct only the portion of their charitable contributions exceeding 0.5% of adjusted gross income, or AGI. At $200,000 of AGI, that means the first $1,000 does not produce a current-year charitable deduction. Concentrating gifts into fewer years may reduce how often your giving encounters that floor. [2]

There is also a new deduction for people who do not itemize: up to $1,000, or $2,000 for married couples filing jointly, for eligible cash donations. Gifts to donor-advised funds do not qualify for that particular deduction. [3]

Both rules belong in the comparison. Bunching should be evaluated across all the years involved, including any annual deductions you would otherwise receive.

3. Use a donor-advised fund to separate contribution timing from charitable support

A donor-advised fund, or DAF, allows you to contribute assets to a sponsoring charity and then recommend grants to eligible charities over time.

Any available deduction is tied to the year you contribute to the DAF, subject to applicable limits and carryforward rules. You do not receive a second deduction when the fund later sends money to your chosen charities. Assets remaining in the fund can be invested, with the potential for tax-free growth. [4]

This can make bunching more practical.

Using the previous example, you could contribute $15,000 to a DAF this year and recommend $5,000 in grants annually for three years, allowing for fees and investment changes. Your charities can continue receiving regular support.

You could also fund that contribution with appreciated shares, combining the timing benefit with the capital gains benefit.

The contribution is irrevocable. Those dollars are committed to charity, and the sponsoring organization has legal control. DAFs also charge fees, and invested balances can decline. [5]

I’d consider a DAF when its flexibility serves a clear purpose, particularly during a higher-income year before retirement. For straightforward gifts to a charity that accepts securities, a direct stock donation may accomplish your goal with fewer steps.

4. Consider qualified charitable distributions once you reach age 70½

A qualified charitable distribution, or QCD, allows someone age 70½ or older to transfer money directly from an eligible IRA to an eligible charity. The qualifying amount is excluded from federal taxable income.

You do not need to itemize, and you do not claim a separate charitable deduction for the same gift. A QCD can also count toward your required minimum distribution, or RMD, for the year. [6]

For 2026, the annual QCD limit is $111,000 per eligible person. Eligible spouses can each use their own limit from their own IRAs. [7]

Suppose your RMD is $30,000 and you already plan to give $5,000 to charity.

If you direct $5,000 to charity through a QCD and withdraw the remaining $25,000 for yourself, you can satisfy the $30,000 requirement while generally including only $25,000 in income, assuming the IRA is entirely pretax and the QCD meets all requirements.

That distinction matters. An itemized charitable deduction generally reduces taxable income without reducing AGI. A QCD keeps the qualifying distribution out of income in the first place, which may also help manage income-related Medicare premium surcharges. [5]

A few details deserve attention:

You must actually be age 70½ when the distribution occurs.
The payment must go directly from the IRA to an eligible charity. Withdrawing money into your bank account and then donating it does not qualify.
QCDs cannot go to donor-advised funds.
They cannot be made directly from a 401(k).
Deductible IRA contributions made for years when you were age 70½ or older can reduce the amount eligible for exclusion. [5, 6]

Coordinate QCDs with your withdrawal schedule. A later QCD does not retroactively turn an RMD you already received into a tax-free distribution.

Choose the strategy that fits your retirement plan

Before retirement, a larger gift of appreciated investments might fit well in a year with higher earnings. A DAF could then provide a source for charitable grants during early retirement.

Once you reach age 70½, QCDs deserve a fresh comparison, especially if you have pretax IRA dollars you do not need for spending.

That is also a reason to be thoughtful about how much you commit to a DAF ahead of time. Funding decades of future giving today could reduce the need for gifts that might be more tax-efficient through QCDs later.

I would also coordinate giving with Roth conversions. A charitable deduction may help reduce the federal income tax associated with a conversion, but it generally does not offset the conversion’s increase in AGI. The effect on Medicare premiums and other income-based calculations can be different from the effect on your tax bill.

My starting point is how much you want to give and what you can comfortably afford within your retirement plan. Then we can determine which assets to use, when to contribute, and how to keep the process manageable.

Thoughtful planning can help you support the people and causes you care about while preserving more of the money needed for your own financial peace of mind.

Federal tax rules and limits reflect 2026. Examples are hypothetical; actual benefits depend on your tax situation, eligibility, deduction limits, and state law.