Year-End Charitable Giving Strategies

Give with Confidence and Clarity 

As we begin to wind down at the end of the year, many people start thinking about charitable giving. For some, it's a long-standing tradition tied to the holidays. For others, it's a way to support causes they care about, while also reviewing their financial picture.  

Whatever your motivation, year-end charitable giving strategies can help you give with more confidence, clarity, and potential tax efficiency. With a bit of planning, you can support organizations you value and help ensure your generosity fits comfortably within your broader financial and retirement plan. 

Why Year-End Charitable Giving Matters for Your Financial Plan

Charitable giving is often more than writing a check in December. It can be an essential part of:  

• Your cash flow and retirement income plan
• Your investment and tax strategy
• Your long-term legacy and estate planning

For retirees and near-retirees, including many Washington State public employees, teachers, and school employees, who may have pensions, retirement accounts, and other assets to consider, this is especially true. Thoughtful charitable giving strategies for retirees can help you: 

• Support organizations that reflect your values
• Potentially reduce taxable income, depending on your situation
• Create a meaningful, sustainable giving plan over time 

When charitable giving is an integrated part of your financial plan, it becomes more intentional and less last-minute. 

Tax-Efficient Charitable Giving: Understanding Potential Tax Benefits 

Many people think about charitable giving tax benefits at year-end, but the rules can be complex. In general, under current IRS guidance, your ability to deduct charitable contributions depends on factors such as whether you itemize deductions on Schedule A (Form 1040), the type of organization you support, and certain limits based on your adjusted gross income. ^{4 2}

The bunching charitable contributions strategy involves: 

• Grouping several years’ worth of charitable gifts into a single tax year,
• So that your total itemized deductions may exceed the standard deduction in that year,
• Then, possibly taking the standard deduction in other years.^{1 2 5} ​

For individuals whose itemized deductions are usually close to the standard deduction threshold, this can be particularly useful.¹

DONOR-ADVISED FUND CHARITABLE GIVING

A donor-advised fund (DAF) is a giving account established at a public charity (a sponsoring organization) where you can make contributions, receive an immediate charitable deduction if you qualify, and then recommend grants to qualified charities over time.⁶

This type of donor-advised fund charitable giving can be a flexible way to combine year-end tax planning with longer-term philanthropic goals. 

QUALIFIED CHARITABLE DISTRIBUTIONS FROM IRAs

If you are age 70½ or older, you may be eligible to make qualified charitable distributions from an IRA (QCDs). Under current IRS guidance, a QCD is generally a direct transfer from your IRA to a qualified charity, can count toward your required minimum distribution (RMD), and may be excluded from your taxable income, up to annual limits.^{5 3}

QCDs do not generate a separate charitable deduction. Still, they can be a powerful tool for retirees who already plan to give and who do not need all their RMD for living expenses. It’s crucial to coordinate QCDs carefully with your IRA custodian and tax professional. 

How Much Should You Give? Aligning Charitable Giving with Your Values and Budget 

Many people ask, "How much should I give to charity annually?"  

Some households choose a percentage of income, while others set a fixed annual amount or focus on specific projects or campaigns. The key is to choose a level that aligns with both your heart and your financial plan. 

While there is no single correct answer, you can consider the following to help you define your gifting amount:  

• Your values: Which causes are most important to you and your family?
• Your current financial picture: What level of giving feels meaningful, but still comfortable, based on your income, savings, and retirement goals?
• Your long-term legacy: How does your giving today fit into your broader charitable giving and legacy planning? 

Want Help Building a Charitable Giving and Legacy Plan? 

Charitable giving can be deeply rewarding—but it also raises essential financial, tax, and legacy questions. At Financial Alternatives, we help clients integrate charitable giving strategies for retirees into their broader retirement, investment, and estate planning.