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  • Writer's pictureW. Scott Hurt, CFP®, CPA

4 Simple Ways A Financial Advisor Can Improve Your Giving Strategy

Updated: Nov 4, 2023

4 Simple Ways A Financial Advisor Can Improve Your Giving Strategy

Whether it’s because it’s a wonderful way to fulfill a holiday tradition and give back to organizations, causes, and communities you care about or it’s the cherry on top of your tax planning strategy, year-end is the most popular time to donate to charity.

The way you give can have as much impact as what you give, and a financial planner can help you hone your giving strategy so you can make the most of every donation.

There are many key issues to consider before year end. But today, we are going to look at four simple ways a financial advisor can strengthen your giving strategy.

1. An advisor can help you bring intention to the giving plan.

Each part of your financial plan should have an intention. You’re likely intentional with the charities you give to or the causes you support, but what about the way you give?

All the elements in your financial plan are optimized for you and your life, and charitable giving should be no exception.

You can bring intention to your charitable giving by making the most of tax-smart gifting strategies, and building giving as part of your regular financial plan, not just during the holidays.

If you are like most people, you likely write a check or donate cash to charities.

While that donation does help your organization of choice, there are additional ways to reduce taxes by improving your giving strategy and tailoring it to you.

Let’s take a look at a few key ways to bring more intention to the way you give this year.

2. Give with a Donor-Advised Fund.

A donor-advised fund (DAF) allows you to make charitable donations into an investment account that can grow over time. You still get to deduct the contribution, but the donation can be invested within the DAF and you can later decide to distribute all or a portion of the account to a qualified charity.

DAFs are a great way to involve your family in charitable efforts and can be a pleasant part of your holiday tradition. Before the family gathering, have each person research and select a charity to discuss. Then, as a group, the family can decide on how to make the annual gift.

This process can help establish a family legacy of charitable giving.

It’s also a great way to compartmentalize your giving for the year or multiple years.

Simply having a DAF account established makes you more likely to carry through with your giving in the first place.

If your situation calls for it, donor-advised funds allow you to maintain your annual giving while taking advantage of charitable bunching.

Charitable bunching is a strategy of making multiple years’ worth of regular donations at once to surpass the standard deduction ($12,400 single filers and $24,800 married filing jointly in 2020). If those donations are to a donor-advised fund, you can still distribute them in the year you would have otherwise donated directly.

3. Retirees should consider a Qualified Charitable Distribution.

If you are subject to take an RMD and make regular charitable donations, then a qualified charitable distribution can be a big tax break for you.

A qualified charitable distribution, or QCD, is a distribution made directly from your IRA to a charitable organization.

Three major benefits of a QCD include:

  • 100% of the distribution from your IRA avoids income tax.

  • A QCD applies toward your RMDs for the year you donate.

  • A QCD may allow you to better manage your taxable income for the year to help avoid Medicare surcharges or bumping up into a higher federal tax bracket.

Notice here that the QCD is not a deduction, but rather the distribution isn’t included in your taxable income. That means you can take advantage of QCDs even if you don’t itemize deductions.

There are specific rules to follow to qualify for a QCD. A few of them are:

  • The QCD limit is $100,000 per person or $200,000 for a couple. While a couple can donate $200,000 each individual is still subject to the $100,000 limit.

  • QCDs can be taken from Traditional IRAs, inherited IRAs, Inherited Roth IRAs, SEP, or Simple IRAs.

  • The distribution must be made directly to the charity. You cannot take the distribution first, then subsequently donate.

If you are wondering if a QCD is something you should consider, download this flowchart that will show you step by step what you need to consider.

4. Donate appreciated assets.

Another tool for tax-efficient giving is through the donation of highly appreciated or low cost-basis stock on which you have a sizable, unrealized gain.

Instead of selling appreciated stock and recognizing a taxable gain, you can donate the stock directly to a charity or a donor-advised fund. When you donate the stock instead of selling it first, you can transfer the full value without incurring a tax liability. That means more of your money can go towards supporting the cause you care about.

This process works even if you were planning to give cash without necessarily selling the stock. Suppose you bought or inherited a stock years ago that has accumulated a sizable amount of gain. Instead of giving cash, donate the same value of the appreciated stock instead.

Improve your giving strategy today.

There are several powerful strategies for donating to charity. While all the strategies above can be great for some people, they are not great for everyone.

Making sure your donation is made in the most tax-advantageous manner allows you to give even more. But, that requires personalized advice to ensure you are making the best decision for you. It’s all about employing the options that work best for you and the charities you give to.

If you want to explore the best way for you to give in consideration of your entire charitable, tax, and financial situation, then set up a call with our team and we’ll help you build your plan from start to finish.



Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.

The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Registration of an investment advisor does not imply a certain level of skill or training.


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