April 6, 2023

The Essential Guide to Tax and Financial Planning for Charitable Donations

Charitable donations are a great way you can give back to your community and support the causes you care about. However, before making charitable contributions anywhere, it’s important to understand the possible tax and financial implications of your gift. This is especially true if you want to make the most impact with your donation while also aiming to maximize possible tax advantages.

To make the most of your financial planning for charitable donations, it’s important to understand how to choose the right charity, the tax advantages you stand to gain from giving, and how to create a giving plan that meshes with your lifestyle. Whether you’re a seasoned philanthropist or just starting out on your giving journey, here’s some information to help you make informed decisions about your charitable donations.

Qualified Charitable Distribution (QCD)

You can aim to minimize your tax liability and maximize the impact of your charitable donations through a qualified charitable distribution (QCD) from your individual retirement account (IRA). A QCD is a direct transfer of funds from your IRA to a qualified charity. This kind of donation is great for seniors who are 70.5 years old or older and looking to lower taxable income. Taking advantage of a QCD lets you make a charitable donation and aim to reduce your taxable income, which can minimize your tax liability.

Donor-Advised Funds

Donor-advised funds (DAFs) let you make charitable contributions, take an immediate tax deduction, and then recommend a grant to your favorite charity at any time. This can be an attractive option if you have appreciated assets you want to donate, but you’re not yet sure which charity would be the best place for it. DAFs also work well if you want to spread out your donations — and the subsequent tax deductions — over several years. By using a donor-advised fund, you can aim to enjoy the tax benefits of making a charitable donation while also having the flexibility to direct funds to the charities of your choice in the future.

Talk to your Churchill advisor for more details on how to aim to maximize charitable giving and work with your tax preparer for tax planning and final tax advice.

Donating Publicly Traded Securities

You can also directly gift appreciating assets, like publicly traded securities. You can aim to maximize your donation’s impact while also reducing your tax liability, especially when you donate securities with increased value. Doing so enables you to avoid paying the capital gains tax on the appreciation, but you can still take a deduction for the securities’ full market value as of the date of the gift. In other words, it’s a double benefit in your direction for that tax year.

Create a Lasting Legacy via Planned Donations

Estate planning makes sure your assets are divided in the manner you’ve chosen after you’ve passed away. A charitable trust is a type of planned donation that allows you to make a significant impact on a cause or organization you care about for a set number of years. Once those years have passed, the remainder of your assets are then passed to the beneficiaries you chose.

Planned donations let you make a lasting impact even after you’re gone, but offer tax benefits for you and your estate while you’re still alive. When considering estate planning and making a lasting legacy through charitable giving, a charitable lead trust is a viable option.

Donate Your Time

Volunteering your time is a way you can make a difference to the people in your community. While money is important and can have a significant impact, donating your time and skills can be just as valuable — if not more so. By giving your time, you directly impact the lives of individuals, some of whom you may even know personally depending on the size of your community.

Volunteering also lets you support causes you care about and develop meaningful relationships with others who share your passion for giving back. Whether it’s through tutoring, mentoring, helping at a local food bank, or any other volunteer opportunity, the gift of your time can be felt more incredibly than one of your money.


Giving back to your community and supporting the causes you care about is a wonderful way to enhance your life and the lives of others. Understanding the tax implications of your gifts helps you aim to maximize the impact of your donations while reducing your tax liabilities. Consider options like those we’ve covered above, such as qualified charitable distributions from your individual retirement account (IRA), donor-advised funds, or gifting appreciated assets. No matter what type of donation you choose, make sure you understand the tax deductions available to you and how to maximize their benefits.  In all events it is important you consult with your tax specialist prior to making any determination as to what is best for you.

Financial Planning Services Disclosure

Churchill provides financial planning services to Clients that specifically engage Churchill for that service. The planning can include defining goals, designing a plan, assisting with implementing the plan, and evaluating and adjusting the plan over time, at the request of the client. The financial planning includes advice regarding securities investing, and may include discussions of a client’s tax, insurance, employee benefits, estate planning and other issues. Churchill, however, does not provide legal, insurance, employee benefit, estate planning, tax or accounting advice, and the client must rely on legal, insurance and accounting professionals for that advice and documentation.


What are charitable contributions?

Charitable contributions are gifts made to qualified charitable organizations, such as nonprofits, houses of worship, educational institutions, and foundations. Charitable contributions can come in various forms, including cash, stocks, real estate, and personal property. The goal of charitable contributions is to provide support for a particular cause or organization and to promote the common good. Charitable contributions may be tax deductible, and tax deductions for charitable contributions offer financial benefits for individuals and corporations.

How are charitable donations deducted?

Charitable donations can be deducted from your taxable income if you itemize your deductions on your federal tax return. To do so, you must make a donation to a qualified charitable organization and keep a record of the donation, such as a receipt or canceled check. The amount of the deduction is limited to certain percentages of your adjusted gross income, depending on the type of property donated and the organization it is given to. While donations help in minimizing taxes, it’s recommended to consult with a tax professional or refer to the IRS guidelines for more information.

How much can you claim in charitable donations without receipts?

The amount you can claim in charitable donations without receipts depends on the amount of your total contribution. If you make a charitable donation of $250 or more, you must have a written acknowledgment from the charity in order to claim a deduction on your tax return. For donations under $250, a canceled check, bank statement, or other reliable written record can serve as evidence of your contribution.

It’s important to note that the IRS recommends keeping receipts, bank records, or other written documentation for all charitable donations, regardless of the amount, in case of an audit.

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