The planning conversations designed to help you give more while strengthening your financial plan
By Tim Koski, CIMA®, EverPar Wealth Management
Key Takeaways:
- What’s the difference between a donor advised fund and a foundation? Both offer tax benefits in the year you contribute, but foundations often work better for families seeking multi-generational involvement and lasting legacy.
- How do you choose which assets to give to charity? We evaluate securities through two lenses: embedded capital gains and how well they fit your current portfolio allocation.
- What does success look like beyond tax savings? Together, we can model the potential impact on your financial plan. We also often help facilitate family conversations about values and legacy.
Some of our most meaningful conversations start simply: “We’ve been giving to charity for years, but we’re wondering if there’s a better way to do this.”
Many people give generously—tithing at church, responding to fundraising requests, and supporting causes that matter to them. But these gifts often happen without much planning around timing, tax efficiency, or long-term impact. In our work with clients, we’ve found that a more thoughtful approach to charitable giving can create opportunities for more impact with less tax drag.
Related: Click here to read “Giving Back: Why We’re Choosing Impact This Holiday Season”
Strategic Giving Tools: Three Approaches We Often Explore
When we talk about strategic giving, we’re usually discussing one of three main approaches, depending on your situation and goals: Donor-advised funds, private foundations, and QCDs.
With each of these options, the gift is irrevocable in the year you make it. You receive the deduction that year, and the funds can be managed and distributed over time according to your wishes.
Donor Advised Funds: Flexibility With Tax Efficiency
For many clients, a donor advised fund (DAF) is the most practical tool. Here’s what we typically see: You might give $50,000 to $100,000 annually to various charities, usually by writing checks throughout the year as requests come in or as needs arise.
With a donor advised fund, you can consolidate multiple years of giving into one tax year. You contribute the full amount to the fund to be invested and grow tax-free, taking the charitable deduction that year. Then, you can distribute the money to specific charities over subsequent years, giving you more control over the timing of your gifts.
This “bunching” strategy becomes particularly valuable in years when your income is higher than usual (perhaps from a business sale, significant bonus, or large capital gain).
By concentrating charitable contributions in a high-income year, you can potentially offset some of that tax impact.
Note: For many clients, annual giving falls well below IRS limits (60% of AGI for cash contributions, 30% for securities). But in years with concentrated charitable giving or significant income events, understanding these thresholds becomes part of the planning conversation.
Private Foundations: When Legacy Involves the Next Generation
For families with significant charitable intent (typically considering contributions of $1 million or more), we sometimes explore private foundations. These require more structure and ongoing administrative work—annual tax filings, formal governance, legal compliance—and come with additional costs that can run $5,000 to $15,000 annually.
So why consider a foundation instead of a donor-advised fund? Control and involvement. With a foundation, you can:
- Employ family members and compensate them for legitimate foundation work
- Maintain complete control over investment decisions
- Create formal structures that involve multiple generations in grant-making decisions
These vehicles become particularly valuable in teaching younger family members about stewardship, values, and impact.
Qualified Charitable Distributions: A Smarter Way to Satisfy RMDs
If you’re 70½ or older and taking required minimum distributions (RMDs) from your IRA, there’s another charitable strategy worth considering: qualified charitable distributions (QCDs).
Rather than taking an RMD, paying income tax on it, and then writing a check to charity, a QCD allows you to transfer funds directly from your IRA to a qualified charity. The amount sent to charity counts toward satisfying your RMD, but it is not included in your taxable income.
Once IRA dollars are distributed to you personally, they’re generally taxed as ordinary income. By giving directly from the IRA instead, you’re effectively using pre-tax dollars to support the causes you care about—reducing your tax bill while meeting your distribution requirement.
QCDs can be especially helpful for retirees who:
- Don’t itemize deductions
- Want to reduce adjusted gross income (AGI)
- Are already giving charitably each year
It’s a relatively straightforward tactic, but when coordinated properly, it can make your required distributions work harder for both your financial plan and your philanthropic goals.
QCDs must be made directly from an IRA to a qualified charity and are subject to IRS rules and annual limits. The maximum annual limit, which was $105,000 in 2024 and $108,000 in 2025, increases to $111,000 per individual in 2026 due to inflation indexing under the SECURE 2.0 Act.
The Asset Selection Conversation: What Do You Give?
Once we’ve determined the right vehicle, the next question is: Which assets should you contribute?
This is where strategic giving intersects with portfolio management. We’re typically helping you look at two things:
- First, we identify securities with significant appreciation. If you’ve held a stock for years and it’s grown substantially, there’s an unrealized capital gain sitting there. Contributing that asset to charity lets you avoid the capital gains tax you’d otherwise pay if you sold it.
- Second, we consider how that security fits within your overall portfolio. Maybe it’s grown so large that it no longer aligns with your target allocation. Or perhaps it’s not performing as well as it once did, and you’vebeen looking for an opportunity to reposition.
When both factors align, providing a large embedded gain and a security that doesn’t fit your portfolio going forward, that’s often the asset we’ll consider contributing. You give the full dollar to charity, we can reallocate within the charitable account without tax consequences, and your portfolio moves closer to its intended structure.
Recently, a client asked me exactly this question while reviewing his holdings. We walked through his portfolio together, identifying appreciated positions and weighing them against his long-term allocation targets. The conversation wasn’t just about maximizing the charitable deduction; it was about making a move that strengthened both his giving and his investment strategy.
What Success Looks Like Beyond Tax Savings
Strategic giving isn’t just a tax play. The real value shows up in a few different ways.
In Your Financial Plan
Money is finite. You can spend it, give it, or lose it to taxes. When we show you the difference between various approaches, you can see how strategic giving affects your long-term wealth trajectory and your ability to meet other goals, whether that’s passing assets to the next generation or maintaining your lifestyle in retirement.
Through Family Engagement
One of the less tangible but equally important measures of success is bringing family members (especially the next generation) into these conversations earlier rather than later.
Instead of accumulating wealth in silence and having your children discover your values and priorities only after you’re gone, strategic giving creates opportunities to talk about what matters:
- What causes are important to our family?
- What kind of impact do we want to have?
- How do we think about balancing our own needs with helping others?
These aren’t easy conversations, but they’re valuable ones. When families use charitable giving as a way to articulate shared values, it often strengthens relationships and helps to create continuity across generations.
Related: Click here to read “Legacy Planning: Charitable Giving”
With Intentionality
Finally, intentional giving means moving from reactive to proactive. Instead of responding to every fundraising request or writing checks as they come up, you’re making deliberate decisions about timing, amounts, and recipients.
That doesn’t mean you can’t be generous or spontaneous. It just means you’re thinking ahead and planning around your giving in the same way you plan around other financial priorities.
Supporting You Through Comprehensive Care
Strategic giving isn’t a separate planning exercise. It’s woven into everything else we’re working on together: tax planning, portfolio management, estate planning, and family wealth transitions. When done well, it strengthens all of those areas simultaneously.
If you’d like to revisit your charitable giving strategy or explore whether any of these approaches might work for your situation, let’s talk. We can walk through your current giving pattern and see if there are opportunities to create more impact with the same resources.
And if you’re not yet working with EverPar Wealth Management, we invite you to learn more about our approach to comprehensive wealth planning in a complimentary Foundation Session. With EverPar, strategic giving is just one piece of helping you build and preserve what matters most.
Reference: https://www.irs.gov/pub/irs-drop/n-25-67.pdf
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