Charitable Giving With the Bigger Picture In Mind

Following are six strategies that can help extend the reach of your charitable giving while potentially providing key tax benefits.

Private Foundations

Private foundations are charitable trusts or nonprofit corporations that hold your assets for the long term and make direct donations to organizations of your choosing. Once you contribute assets to the foundation, they move out of your taxable estate. Best suited for long-lasting charitable giving plans, they can provide opportunities to involve future generations in family giving, support scholarships and have unique flexibility to respond to emerging community needs. These structures can help families create a lasting charitable legacy while remaining engaged in the causes they care about most.

Charitable Trusts

For clients with more complex financial or estate planning needs, charitable trusts can align philanthropic objectives with broader wealth planning goals. While charitable remainder trusts can provide an income stream to you or another beneficiary during life while ultimately benefiting charitable organizations, charitable lead trusts make charitable gifts first before transferring remaining assets to future generations. Like a private foundation, assets contributed to a charitable trust are also removed from your taxable estate.

Helping Nonprofits Make Their Gifts Go Further

On the Charitable Solutions team, we also work closely with nonprofit organizations and their board members by providing investment management, governance insights and charitable planning resources. By sharing best practices and strategies for tax-efficient giving, we help organizations strengthen their long-term sustainability and support the generosity of their donors.

Donor-Advised Funds and Bunching

If you or your family support charitable organizations year after year, a donor-advised fund (DAF) can provide flexibility in how and when the gifts are made. As year-end approaches, one commonly used strategy within these vehicles is bunching, where you combine several years’ worth of planned charitable contributions to a DAF into a single year. This approach allows you to set aside charitable dollars today while still supporting organizations over time.In some cases, it can even help you exceed the standard deduction and realize an itemized charitable deduction in the year the contribution is made, making it particularly attractive during higher-income years. It’s an opportunity to be more strategic about when you contribute, and potentially realize greater tax benefits as a result.

A Closer Look at State Tax Benefits

Depending on where you live, your charitable contributions may qualify for state income tax credits that reduce your state tax liability by a percentage of your qualifying gifts.

The types of contributions that qualify vary widely. While some states might promote gifts to endowment funds that benefit local charities, others support initiatives like neighborhood revitalization and scholarship programs for lower-income families. As you consider your giving before year-end, it’s worth exploring whether any of these opportunities align with your philanthropic goals.

Keep in mind that the requirements for applying for the credit and using charitable contributions can vary, and state tax credits may affect the amount you can deduct on your federal tax return. Consult your tax and legal advisors to determine which opportunities may make sense for you.

Qualified Charitable Distributions

If you are age 70½ or older, year-end is an ideal time to consider a Qualified Charitable Distribution (QCD) from an IRA. A QCD allows funds to be transferred directly from an IRA to a qualified public charity, avoiding income tax and providing a simple and effective way to support the organizations you care about. Plus, if you are required to take distributions from your IRA, a QCD can satisfy all or a portion of that obligation while directing assets to charitable causes rather than personal income.

Giving By Mail? Read This First

Per updates from USPS’s 2025 “Mailbox Rule,” to ensure a mailed-in charitable donation is counted before year-end, make sure it gets manually postmarked at the post office counter prior to December 31.

Appreciated Securities

Many charitable gifts are made with cash, but appreciated securities can be an effective way to increase the impact of a contribution. Instead of selling appreciated stock or mutual fund shares and then contributing the proceeds, consider transferring those assets directly to a qualified charity and avoiding capital gains tax. This approach can allow more of an investment’s value to support the charitable organization’s mission while helping you make meaningful gifts from assets that have grown over time.

Naming a Charity as a Designated Beneficiary

Year-end is a good time to review your beneficiary designations and ensure they still reflect current charitable and estate planning goals. Naming a charity as the beneficiary of a retirement account, life insurance policy or other financial asset is often one of the simplest ways to incorporate charitable giving into your estate plan. Because beneficiary designations pass directly to the named organization, they can be easy to establish, update and coordinate with existing estate planning documents. Whether a charity is named as a primary or contingent beneficiary, the asset owner retains control and can revise the designation as circumstances change, meaning this strategy can create a lasting legacy while preserving flexibility over your lifetime. 

In all these ways, we’re here to help clients navigate the complexities of charitable planning and administration while exploring strategies that can support both philanthropic and financial goals. Talk with your Baird Financial Advisor about how we can help you make a greater impact through your giving.

¹ AP-NORC Center for Public Affairs Research. 2025. “Most Americans have donated to those in need within the past year.”