Year-End Charitable Planning: Strategies to Maximize Your Impact
November 24, 2025
Rodd Miller, CFP® | President
Winston Churchill is often credited with saying that "it is more agreeable to have the power to give than to receive." As the holidays approach, many turn their attention to charitable contributions and how philanthropy fits into a broader financial strategy. Strategic charitable planning serves dual purposes: advancing philanthropic objectives while enhancing tax efficiency. The key consideration extends beyond simply deciding to donate—it involves determining optimal methods that amplify both the support for valued causes and advantages within your comprehensive financial framework.
The current year offers distinct advantages for charitable planning activities. Recent legislation, specifically the One Big Beautiful Bill Act (OBBBA), has introduced provisions affecting charitable giving decisions. Furthermore, with the December 31 deadline for tax-year contributions approaching, now is an ideal time to evaluate your philanthropic approach. Learning how to properly structure charitable contributions can elevate generosity into a fundamental component of your financial strategy.
U.S. household wealth has climbed to unprecedented heights
According to the National Philanthropic Trust, Americans contributed $593 billion to charitable organizations in 2024, representing a 6.3% rise compared to 2023.
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This demonstrates that philanthropy continues to hold significance for numerous households, despite a recent decline in the proportion of Americans making donations. The chart shown illustrates how household wealth has grown consistently alongside economic expansion and stock market gains. Rising income levels and accumulated wealth, combined with tax code modifications, have generated fresh incentives for charitable contributions.
Philanthropic contributions also serve a vital function in estate planning strategies. Charitable bequests avoid estate taxation, making them an effective method to decrease estate tax obligations while benefiting meaningful causes. For individuals whose estates face potential estate tax exposure, combining lifetime charitable giving with testamentary bequests can substantially lower the tax burden transferred to beneficiaries.
Perhaps most significantly, charitable giving enables families to establish an enduring legacy, strengthen values across generations, and minimize lifetime tax obligations. For numerous families, philanthropy provides opportunities to engage younger generations in substantive conversations about principles and responsible stewardship. The complexity for investors lies in the fact that while the motivation to contribute is simple, identifying the most effective strategy demands careful consideration.
Strategic timing and structure have become increasingly important
The OBBBA has introduced meaningful modifications to charitable giving dynamics. Particularly noteworthy is the expansion of taxpayers able to itemize deductions, resulting from the state and local tax (SALT) deduction cap increase from $10,000 to $40,000. Because charitable donations only provide tax benefits through itemization, this change elevates their significance in contemporary tax planning.
Moreover, a limited window exists from 2025 through 2029 to maximize the timing and configuration of charitable contributions. Beginning in 2026, the OBBBA establishes a charitable deduction floor for itemizers at 0.5% of adjusted gross income (AGI). Under this provision, only charitable gifts surpassing 0.5% of AGI will qualify for deductions. Consider an individual with $200,000 in AGI—only contributions exceeding $1,000 (0.5% of $200,000) would generate deductible amounts.
A strategy employed by some investors to address this limitation involves "bunching," which consolidates several years' worth of donations into one tax year to surpass the deduction floor. This technique has gained traction since the 2017 Tax Cuts and Jobs Act substantially increased the standard deduction, thereby reducing the proportion of taxpayers who itemize.
Selecting which assets to contribute represents another crucial decision point. Donating highly appreciated securities, for instance, delivers three distinct tax advantages: eliminating capital gains tax liability from direct sales, excluding future appreciation from the taxable estate, and generating ordinary income deductions. When pursuing ordinary income deductions, donors should evaluate whether the recipient qualifies as a public or private charity and estimate their AGI accordingly. This "triple benefit" proves particularly valuable during years with substantial capital gains—such as when equity compensation vests or following business sales—and when offsetting losses are unavailable.
Incorporating charitable contributions into portfolio rebalancing activities can further improve efficiency. Some investors prioritize donating appreciated holdings from taxable accounts, subsequently replacing those positions through purchases in tax-deferred accounts. This methodology preserves target asset allocations while optimizing tax advantages.
Common charitable giving structures
Various charitable giving mechanisms serve distinct functions, and choosing the appropriate structure depends on individual circumstances and objectives. Below are several frequently utilized examples, though this list is not comprehensive:
Donor-advised funds (DAFs)
have experienced substantial growth, with assets now surpassing $250 billion.
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DAFs operate similarly to charitable investment accounts: contributions are made, immediate tax deductions are received, and grant recommendations to charities follow over time. Assets can remain invested and appreciate tax-free while donors determine the timing and beneficiaries of distributions. DAFs prove especially useful during years when maximizing deductions holds particular importance.
Under current tax regulations, contributors can structure DAF donations to exceed the 0.5% AGI floor threshold previously described. DAFs also offer greater simplicity compared to alternative structures, enhancing their accessibility for broader donor populations.
Qualified charitable distributions (QCDs)
represent an additional option for individuals aged 70½ or older holding traditional IRAs. QCDs permit direct transfers of up to $108,000 for tax year 2025 from IRAs to charitable organizations. This approach can fulfill required minimum distribution (RMD) obligations while excluding transferred amounts from taxable income. QCDs deliver tax benefits independent of itemization status, making them valuable during years when itemized deductions provide less favorable outcomes.
Charitable remainder trusts (CRTs)
offer another vehicle for supporting philanthropic causes within estate planning frameworks. Through CRTs, assets transfer into trusts that distribute income to beneficiaries for specified periods, with remaining assets ultimately benefiting charities. This structure proves particularly advantageous for highly appreciated assets, as trusts can liquidate holdings without donors recognizing immediate capital gains taxes.
As with any trust vehicle, careful attention to structure is essential. Certain retained powers, for example, could trigger asset inclusion in the grantor's taxable estate. Furthermore, designating beneficiaries other than the grantor or spouse may generate gift tax consequences.
For individuals fortunate to possess substantial assets and long-term philanthropic ambitions, additional considerations may encompass:
• Private foundations, which provide maximum oversight and family governance frameworks but require higher administrative obligations, minimum distribution mandates, and excise taxes on investment earnings
• Charitable lead trusts, which distribute income to charities for defined periods before transferring assets to heirs
• Supporting organizations, which collaborate closely with designated public charities
• Pooled income funds maintained by certain charitable institutions
These examples highlight some of the most prevalent charitable giving structures, though additional options and modifications may suit specific circumstances. Consulting with a trusted advisor can facilitate identification of approaches that best align with individual goals.
Integrating charitable giving into your overall financial plan
The most successful charitable planning incorporates philanthropy into your comprehensive financial framework rather than treating it as isolated from other financial considerations. This integrated perspective examines how charitable giving intersects with investment management, tax optimization, retirement income planning, and estate strategies.
Perhaps most valuably, including younger family members in charitable decision-making generates opportunities to explore what matters most to your family, why particular causes merit support, and how to assess nonprofit effectiveness. These discussions can become among the most significant elements of wealth planning, helping preserve your family's values and stewardship principles across generations.
The bottom line? As year-end approaches and new tax provisions create both opportunities and complexities, optimizing the timing, structure, and mechanisms for charitable contributions becomes essential. This approach can enhance both your philanthropic influence and your financial outcomes.
1. https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
Securities offered through LPL Financial. Member FINRA/SIPC. Investment Advice offered through Miller Wealth Management, a Registered Investment Advisor and separate entity from LPL Financial.
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