The holidays are almost upon us, and now is a great time to consider supporting the causes you believe in through charitable giving. Here are five ways you can participate in the giving season before the end of 2023.

1. Utilize Your IRA
   If you are over 70.5 years old or still need to complete your IRA Required Minimum Distribution (RMD) before year’s end, consider making a Qualifying Charitable Distribution (QCD) from your IRA directly to a qualified charity. You can make a QCD up to $100,000 per year, which can help satisfy all or a portion of your RMD. While you cannot claim a QCD as an itemized charitable deduction, the distribution also does not show up as taxable income on your return.
2. Donate Appreciated Stock
   While donating cash can work well for smaller gifts you want to make this holiday season, you might wish to explore more tax-efficient methods, such as donating long-term appreciated securities directly to a qualified charity. You avoid paying capital gains tax on the gifted stock and are still eligible to deduct the fair market value from your income taxes, up to the IRS allowable amount.
3. Bunch Charitable Gifts
   You can utilize a “bunching” strategy to front-load multiple years of giving. This might allow you to surpass the itemization threshold this year and then elect the standard deduction in subsequent years. This option can benefit you if you’re in a higher income tax bracket or if your tax rate is higher now than you expect it to be in the future — perhaps due to a windfall or bonus.
4. Leverage a Donor Advised Fund
   One increasingly popular charitable vehicle is a Donor-Advised Fund (DAF). A DAF is a giving account maintained by a public charity. It allows you to contribute cash or longterm appreciated assets and receive an immediate tax deduction, and often can invest and grow your money tax-free. As the donor, you can recommend grants to your favorite charities. These grants can be paid immediately or can be spread across several years. If you are still undecided about what charities you’d like to support but could really benefit from a tax deduction this year, DAFs can provide an opportunity to delay recommending the grants until you have time to talk with your family or trusted advisors to develop a strategy to support your philanthropic endeavors.
5. Make Giving a Family Tradition
   Family gatherings over the holidays can be ideal forums for discussing the causes closest to you. To encourage engagement, you can have younger family members choose charities or causes of their own to support. These gatherings might also be an opportunity to discuss your philanthropic legacy with your heirs and what role charitable gifts might play in your estate plan, perhaps through specific trusts or bequests.

Ready to Give?

There are a number of ways to give back before the year is up. For help navigating the charitable giving process, consider partnering with a financial advisor or tax professional who can build a strategy that aligns with your goals and circumstances. Their expertise can ensure you maximize your charitable impact and receive the maximum tax benefit.

Heather Kessler, CFP®, is team lead and wealth manager at Coldstream, an employee-owned wealth management firm in the Pacific Northwest.