Tax Efficient Giving Concepts

ACCELERATE YOUR TAX-EFFICIENT PHILANTHROPY

Have you wondered how you can accelerate your tax-advantaged philanthropy at the Community Foundation in 2025 and beyond? Experts (and the IRS) have several suggestions that we’re happy to share with you. Please consult your tax advisor or financial planner for guidance. 

1) Act Now: Charitable deductions are worth more in 2025. Make this year your itemizing year with bunching.

Starting in 2026, deductions below 0.5% of your adjusted gross income (AGI) disappear, and high earners in the 37% bracket will only get a 35% benefit. Neither rule applies this year—so shifting gifts into 2025 gives you more value. 

Utilizing a bunching strategy with a donor-advised fund (DAF) is the easiest way to lock in these benefits. Bunching means consolidating multiple years of gifts into one year to take advantage of itemizing, then taking the standard deduction in off years.  

To illustrate the tax savings that may occur when a donor utilizes bunching, here is a comparison:

Why this year? 2025 is the perfect target year for bunching your gifts. Itemized charitable deductions are worth more in 2025 than afterwards. Also, it can be easier to surpass the standard deduction now because more state and local taxes (SALT) are deductible (up to $40,000 instead of $10,000). And after bunching gifts in 2025, you’ll have even more flexibility for gifting in the off years. Why? Starting in 2026, you can deduct gifts up to $1,000 if you aren’t itemizing.  

2) Maximize Appreciated Asset Gifts

Donating appreciated assets to your DAF creates two tax benefits.  

Benefit 1: The tax deduction is the same size as a gift of cash (the asset must have been owned for a year or more). 
Benefit 2: You avoid paying capital gains tax. 

Remember: Don’t sell then give. If you do, you’ll have to report the income and pay the capital gains tax. Instead, give before the sale. The Community Foundation pays no tax when it sells and neither do you—and the net proceeds of the sale are deposited directly into your DAF.  

3) Try a Charitable Swap Strategy

Instead of donating cash, consider giving appreciated stock. Then, use the cash you would have donated to repurchase the same stock. Your portfolio stays the same, but the built-in capital gains on the donated shares disappear. The newly purchased shares now have a higher cost basis—essentially resetting your capital gains. And since this isn’t a sale at a loss, the “wash sale” rule doesn’t apply, so there’s no waiting period to buy the stock back. 

4) Supercharge Your IRA Giving

If you’re 70½+, you can give directly from your individual retirement account (IRA) in the form of a qualified charitable distribution (QCD). These gifts: 

• Never count as income
• Fulfill annual required minimum distribution (RMD) requirements at 73+
• Lower your AGI, protecting deductions and benefits like the new senior bonus deduction and expanded SALT cap
• Help reduce Medicare premiums and other income-based taxes

5) Start IRA Giving Early - At 70½, Not 73

If you’re age 73 or older, you’re required to take RMDs from retirement accounts like IRAs or IRA rollovers—and those distributions count as taxable income. But there’s a smarter way to give: by making a QCD directly from your IRA to a charity, like the Community Foundation. QCDs don’t count as income, and they reduce your RMD.  

Even better, you don’t have to wait until 73. Starting at age 70½, you can make QCDs of up to $108,000 per year, even if you’re not yet required to take RMDs. These funds go straight to charity, never touch your taxable income, and can make a real impact in your community. 

6) Combine Giving with Lifetime Income

Have an RMD but not sure if you really need the income? You can hedge your bets by making a one-time IRA gift to the Community Foundation in exchange for lifetime income from a charitable gift annuity (CGA). For a person aged 75, a CGA normally pays 7.0% per year for life. This one-time transfer also counts as an RMD but is capped at $54,000 per person. 

Of course, a CGA can be a smart way to give even outside of the IRA. There are no size limits on a normal CGA, and it creates an immediate up-front tax deduction. The best time to take that big deduction? 2025! 

7) Smarter Estate Gifts: Use Retirement Accounts

Leaving part of an IRA, 401(k), or 403(b) to a fund at the Community Foundation is one of the most tax-efficient ways to give. Heirs pay taxes on these accounts, but charities like the Community Foundation don’t, making them the best assets to leave to nonprofits. 

8) Pair a Roth Conversion with Charitable Giving

A Roth conversion moves money from a standard IRA into a Roth IRA. The benefit: all distributions from the Roth IRA, even future earnings, are tax-free. The downside: all money moved into the Roth IRA counts as immediate income. But anytime you have a big income spike, charitable planning can create a deduction spike to help offset it. This can include strategies like DAFs, CGAs, CRTs, life estate deeds, or paying a multi-year pledge early. 

KEY TIPS FOR BUNCHING

Now more than ever, tax smart giving means bunching. And bunching usually means using DAFs. Bunching first became popular in 2018 when the standard deduction doubled. The percentage of taxpayers who itemize dropped from 30% to just 10%. For 90% of taxpayers, that meant charitable deductions no longer mattered—unless they started bunching. 

The new tax law makes this bunching strategy even more beneficial to donors in several ways: 

1. Bigger Standard Deduction, Same Impact

In 2026, the standard deduction increases by another $750 to $1,125 per person. This pushes more taxpayers into non-itemizer status. For them, any charitable gifts beyond $1,000 per person would be lost—unless they bunch. 

2. More Flexibility with Off-Year Giving

The new tax law allows non-itemizers to deduct up to $1,000 of charitable gifts each year. Previously, any cash gifting done in the off years (when taking the standard deduction) created no tax benefits. Now, up to $1,000 of the off-year gifting is still deducted. This provides a bit of flexibility while still maximizing deductions. This new option is a complement, not an alternative to bunching. Bunching remains essential since gifts above $1,000 are otherwise lost. 

3. Bunching is Better for Itemizers, Too

Bunching isn’t just for non-itemizers. The strategy is also a tax-smart way for itemizers to sometimes take the standard deduction. Here’s a couple of examples for comparison: 

Net gain from bunching: $15,000 more in deductions — without giving a dollar more. 

4. Avoiding the New Charitable Floor

The new law sets a floor: itemizers lose the charitable deductions from giving below the charitable floor of 0.5% of their adjusted gross income (AGI). For example, if a donor’s income is $100,000, the first $500 of their itemized charitable contributions are lost. This encourages bunching. 

You can see that bunching saved $500 in deductions even though the total giving is the same. 

This strategy also applies to corporations. In the new tax law, corporations lose the charitable deductions from giving below the charitable floor of 1% of net income. Consider accelerating gifts into 2025 to bypass the floor entirely. 

5. Best Practice: Big Asset Gifts in Target Years, Small Cash Gifts in Off Years

Bunching means giving big in the itemizing target years and not giving in the non-itemizing off years. In every instance, gifting appreciated assets (publicly traded securities) is smarter than giving cash because it creates a double tax benefit.  

SUMMARY

The 2025 tax rules create a one-time window to maximize giving and minimize taxes prior to December 31st. For many donors, this means bunching gifts, giving appreciated assets, or using retirement accounts strategically. Always coordinate with your tax advisor to find the best fit for your situation. 
 
Questions? Contact Nick Grimmer, CFRE, Chief Development Officer, (315) 525-6584, ngrimmer@foundationhoc.org.  
  
This article includes insight from Russell James, J.D., Ph.D., CFP, Professor of Charitable Financial Planning at Texas Tech University. It was edited for content and republished with permission. The information provided is for educational and general informational purposes only and should not be construed as financial, tax, legal, or investment advice. Please consult with a qualified financial advisor, tax professional, or attorney before making any financial decisions or taking any action based on this content.