Optimize Your Year-End Giving

Optimize Your Year-End Giving:
A Strategic Approach to Philanthropy

As the year draws to a close, many individuals look for ways to give back to their communities and causes that matter most to them. Year-end giving is an effective way to make a meaningful impact, while also optimizing your charitable contributions for tax benefits. By strategically planning your philanthropy, you can maximize the benefits for both the organizations you support and your financial well-being.

Start by Evaluating Your Giving Goals

Before making any donations, take a step back and evaluate your philanthropic goals. Do you have specific organizations in mind? Are there causes or issues that resonate with you more this year than in the past? Consider the type of impact you want to make and the long-term relationships you’d like to build with charities. This evaluation will help guide your giving and ensure that it aligns with both your values and financial plans.

Understand the Tax Benefits of Year-End Giving

One of the key benefits of giving at the end of the year is the potential for tax deductions. Charitable contributions are tax-deductible if you itemize your deductions, which can reduce your taxable income for the year. You can also give appreciated assets like stocks or real estate to avoid paying capital gains taxes while supporting causes you care about. Understanding the specific tax advantages of different donation types is essential to optimizing your gift.

Work with Your Financial Advisor

A financial advisor can play a crucial role in helping you navigate your year-end giving strategy. They can provide insight into the most tax-efficient giving methods, such as donor-advised funds (DAFs) or charitable trusts, which allow you to give in a way that benefits you both today and in the future. Advisors also have the expertise to help you balance charitable giving with other year-end financial priorities, like tax planning and retirement contributions.

Explore Donor-Advised Funds (DAFs)

Donor-Advised Funds (DAFs) are becoming an increasingly popular way to give. These accounts allow you to contribute to a charitable fund, take an immediate tax deduction, and then direct donations to your chosen causes over time. A DAF gives you the flexibility to donate to multiple charities while spreading out the timing of your actual contributions. Your financial advisor can help set up and manage a DAF to ensure it fits into your overall financial strategy.

Timing is Key for Maximizing Impact

To make the most of your year-end giving, timing is crucial. Make sure you’ve completed your charitable donations by December 31st to count them toward the current year’s tax deductions. Additionally, if you're looking to support a charity with a significant year-end fundraising campaign, your contribution could make a substantial difference during this critical time. Your advisor can help track deadlines and provide reminders to ensure you're meeting your philanthropic and tax goals.

Review Your Giving Plan Regularly

Year-end giving is just one piece of your long-term financial and philanthropic strategy. After the year ends, take time to review how your charitable contributions aligned with your financial goals and adjust your plan for the following year. Working with your financial advisor throughout the year will help ensure that your giving remains consistent with your values, financial situation, and the causes you wish to support.

By carefully planning your year-end giving with the help of your financial advisor, you can create a more impactful and tax-efficient strategy, all while supporting the causes you care about most.

By: Jerit Tripp, CFP®, CRPS®, CWS®, BFA, CPFA