Making Your Generosity Go Further
Are you already supporting causes close to your heart, or thinking about starting? What if your generosity could also reduce your tax bill? Many of you want your donations to benefit both the causes you care about and your broader financial goals. That’s why we focus on helping you give in ways that are both meaningful and tax-efficient.
Below are four smart strategies that can help you maximize the benefits of your charitable giving—for the organizations you support and your own financial wellbeing.
1. Qualified Charitable Distributions (QCDs)
For clients aged 70½ and older, Qualified Charitable Distributions are often our top recommendation. A QCD allows you to donate directly from your IRA to a qualified charity. The funds can go straight to the organization, or we can arrange to have them sent to you for delivery.
Why is this important? Many retirees take the standard deduction and miss the opportunity to itemize charitable gifts. But with a QCD, your donation can count toward your Required Minimum Distribution (RMD) starting at age 73—potentially reducing your taxable income. It's an efficient way to support causes you care about while receiving a valuable tax benefit.
If you’re 70½ or older and planning to make charitable gifts from your IRA, connect with us first so you can take full advantage of this strategy.
2. Donating Appreciated Stock
Giving appreciated stock or other investments from your brokerage account is another highly effective option. For example, say you purchased $1,000 worth of Apple stock that’s now valued at $10,000. If you sell it, you’d owe capital gains tax on the $9,000 profit. But by donating the stock directly to a charity, neither you nor the charity pays tax on the gain. The charity receives the full $10,000 value, and you avoid the tax bill.
Here’s a smart twist: You don’t have to donate stock you’re ready to part with. You can gift appreciated shares and then immediately repurchase the same stock with cash. This resets your cost basis, helping you reduce taxes on future gains. Whether you’re donating stocks, real estate, or other appreciated assets, this strategy can be used at any age and provides flexibility along with meaningful tax savings.
3. Bunching Charitable Donations
If you usually take the standard deduction, "bunching" your charitable gifts can unlock extra tax benefits. This involves grouping several years' worth of donations into a single year so your total giving exceeds the standard deduction, allowing you to itemize and claim a larger deduction.
Some clients choose to give as usual throughout the year and then make the following year’s planned donations before year-end. Alternating years in this way has helped many save significantly on their taxes.
4. Donor-Advised Funds (DAFs)
Donor-advised funds offer a powerful, long-term giving solution. Think of a DAF as your personal charitable account: you can make a large contribution upfront—say, $100,000—and then recommend grants to your favorite charities over time.
DAFs not only simplify and organize your giving, they also offer immediate tax benefits and provide an opportunity to involve your family in philanthropy. They’re a great way to build a lasting legacy of generosity across generations.
Making an Impact—Now and in the Future
There’s no one-size-fits-all approach to charitable giving, and each option comes with its own considerations. Our team at Middlebrook Wealth is here to help you evaluate your choices and create a giving plan that aligns with your values and your financial goals.
Ready to make your generosity go further? Let’s talk about which strategies best support your mission and financial plan.
Advisory services provided by NewEdge Advisors, LLC doing business as Middlebrook Wealth, as a registered investment adviser. Securities offered through NewEdge Securities, LLC, Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC. are wholly owned subsidiaries of NewEdge Capital Group, LLC.
The information in this material is not intended as tax or legal advice. Please consult your legal or tax professionals for specific information regarding your individual situation. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.