Charitable giving can be one of the most rewarding parts of your financial life. It allows you to support the causes and communities you care about most, while creating opportunities to reduce tax liability. In this newsletter, we'll explore several different approaches. The way you choose to give—whether in cash, appreciated stock, through a donor-advised fund, as part of your retirement strategy through qualified charitable donations, or as a legacy gift—can make a dramatic difference in the value of your contribution and the benefits you receive in return. With careful planning, you can ensure that your generosity not only makes the biggest difference for the organizations you support but also provides meaningful benefits for you and your family.

Cash vs. Appreciated Stock Charitable Contributions

Cash remains the simplest and most widely accepted form of giving. Most charities accept contributions via check, electronic transfer, or credit card. Nearly every charity accepts cash, while some do not have the ability to process stock donations. Smaller contributions under $250 are usually best made in cash.

Cash gifts provide tax benefits for those who itemize and typically are deductible up to 60% of adjusted gross income (AGI), and any excess may be carried forward for up to five years. For example, a donor with $300,000 of AGI who contributes $200,000 may deduct $180,000 this year and may carry $20,000 forward to be used for future years.

Colorado also offers an additional advantage to residents through the Child Care Contribution Credit. Eligible contributions include checks, cash, electronic transfers, and card payments. The contributions to qualifying childcare programs can generate a credit equal to 50% of the donation, up to $50,000, with a maximum eligible contribution of $100,000 per year for joint filers. Unused credits can be carried forward, and to claim the credit, donors must obtain a certificate from the qualifying organization. GHPIA is familiar with Colorado tax regulation, but the donor should always check with their CPA to help with state specific tax advice.

Donating appreciated stock offers different advantages. By giving long-term appreciated shares, donors can avoid capital gains taxes while claiming a deduction for fair market value of the gift. Stock gifts are generally deductible up to 30% of AGI, with excess carryforward for five years. For instance, donating stock purchased for $10,000 that is now worth $100,000 may allow a $60,000 deduction if AGI is $200,000, with the remaining $40,000 carried forward.

Choosing between cash and stock often comes down to planning with your investment advisor. Many donors can maximize their giving by combining both strategies in the right scenarios.

Donor-Advised Funds

A donor-advised fund (DAF) allows flexible, strategic charitable giving. You contribute cash, stock, real estate, or cryptocurrency to a sponsoring section 501(c)(3) organization such as DAFgiving360 (Schwab) or Fidelity Charitable (Fidelity). The sponsoring organization legally owns the assets, but you retain advisory privileges to recommend grants and manage investments.

DAFs provide immediate tax benefits and allow you to distribute funds over time. Donated appreciated assets avoid capital gains, and contributions may grow tax-free before being granted to charitable organizations of the donor’s choosing. Your advisor can typically help manage the DAF. They assist with choosing investment pools, coordinating contributions, and submitting grant requests. This flexibility makes DAFs ideal for donors with highly appreciated assets who want to plan strategically while maintaining control over the timing and destination of their gifts.

Limitations include irrevocable contributions, possible fees from sponsoring organizations, and restrictions to only being able to donate to 501(c)(3) organizations. Despite the constraints, DAFs can allow for long term planning and immediate tax savings.

Bunching Charitable Contributions

For donors near the standard deduction threshold, bunching contributions can maximize tax benefits. This strategy consolidates multiple years of giving into one year to exceed the standard deduction, generating the possibility of larger itemized deductions in a single year.

For example, a couple filing jointly with $300,000 of taxable income gives $15,000 to charity annually, along with $10,000 in mortgage interest and $15,000 in state and local taxes. Their deductions total $40,000—only $8,500 above the standard deduction. That translates to roughly $2,000 in savings each year, or $6,000 over three years. If they bunch three years of donations into one $45,000 gift, their deductions rise to $70,000 in the first year and they would still be entitled to the standard deduction in the next two years. This creates about $9,300 in savings--more than 50% higher than spreading gifts annually.

Pairing bunching with a donor-advised fund offers even more flexibility. You can secure the itemized tax deduction today while distributing grants to charities gradually over time through your DAF. For those with fluctuating income or large charitable goals, it can be an efficient way to make charitable contributions go further. Although bunching requires careful planning, the potential tax savings can be significant, making it important to review with your advisor and your tax professional.

Qualified Charitable Distributions (QCDs)

Qualified charitable distributions are another powerful strategy for charitable contributions. A QCD allows IRA owners age 70½ or older to donate up to $108,000 annually (2025 limit) directly to qualified charities. Eligible accounts include traditional IRAs, inherited IRAs, SIMPLE IRAs (inactive), and SEP IRAs (inactive). A QCD counts toward your required minimum distribution (RMD) and unlike regular IRA withdrawals, they are excluded from your taxable income and help lower your adjusted gross income (AGI).

The 2025 annual QCD limit is $108,000 per person, or $216,000 for married couples if each spouse uses a separate IRA. Unlike itemized deductions, QCDs provide tax benefits regardless of whether you itemize, making them especially useful for donors who do not need RMD funds for living expenses.

There are some limitations. QCDs cannot be made from 401(k)s, donor-advised funds, or private foundations. They must be sent directly to the charity, which requires careful coordination. Additionally, tracking distributions will require coordination with your tax professional, as the 1099-R only reports the gross IRA distributions. Since 1099-R forms may not specifically identify QCDs, you must keep your tax professional informed and provide proper documentation.

QCDs are one of the most popular forms of gifting. If you are over 70½ and do not rely on your full RMD, QCDs can be one of the most effective charitable contribution strategies.

Lifetime vs. Legacy Giving

Charitable contributions can occur throughout your lifetime or through your estate plan. Both approaches carry unique advantages, and many donors use a combination of the two. Lifetime charitable giving may be most effective when your net worth exceeds the estate tax exemption ($13.99M for individuals and $27.98M for couples in 2025 and changing in 2026 to $15M for individuals). It can also be appropriate when you have excess cash flow or assets such as real estate, securities, or personal property. Lifetime gifts allow you to see the impact of your generosity while still receiving possible income and estate tax benefits. Some charities also offer recognition opportunities, such as naming rights or invitations to special events, which allow donors to connect directly with the causes they support. However, these gifts are irrevocable and if your financial situation changes, you may regret the commitment.

Legacy giving through bequests or trusts preserves control over assets during your lifetime. This approach may be best when the gift is larger than you can comfortably make while living. Charitable bequests reduce the size of your taxable estate and may help minimize estate taxes. You also retain the ability to amend your will or revocable trust if something changes.

If you do have special bequest in your estate planning documents, we recommend reviewing those documents every five years to ensure your documents align with your wishes. Charities' names may change, relationships with organizations may change, and fixed dollar amounts may lose value over time.

Working with your advisor and estate planning attorney can help balance both strategies to align with your goals and values. Typically, by giving some gifts now while reserving others for legacy planning, you can achieve tax efficiency, personal satisfaction, and long-term impact.

Conclusion

Charitable giving can be one of the most meaningful ways to align your wealth with your values. With thoughtful planning, you can support the causes and communities that matter most to you while also realizing tangible financial benefits. Whether you choose to give in cash, appreciated stock, through a donor-advised fund, or via your IRA, the right strategy can enhance both the impact of your gifts and your overall financial plan.

As year-end approaches, it’s an ideal time to revisit your giving strategy. The GHPIA team can help you identify opportunities to make your contributions more effective—ensuring your generosity creates lasting value for you, your family, and the organizations you support.

The GHP Investment Advisors Financial Concierge Newsletter is published as a service to our clients and other interested parties. This material is not intended to be relied upon as a forecast, research, investment, accounting, legal or tax advice and is not a recommendation offer or solicitation to buy or sell any securities or to adopt any investment strategy. The views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only. Past performance is no guarantee of future results.

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Author: Sean Tully

Charitable Contributions: Turning Generosity Into Tax Savings

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