Smart Gifting Strategies

AIO Financial – Fee Only Financial Advisors

Smart Gifting Strategies: How to Maximize Your Tax Deduction While Supporting Causes You Love

At AIO Financial, many of our clients want to do more than just grow their wealth—they want to give back. Whether you’re already supporting charitable causes or considering a donation this year, there are smart, strategic ways to give that can increase your impact and reduce your taxes. In this blog (and podcast episode), we’ll explore how you can:

• Get a tax deduction by donating appreciated stock
• Satisfy your Required Minimum Distribution (RMD) with a charitable gift
• Use a Donor-Advised Fund (DAF) to bundle your giving
• Support high-impact, transparent charities aligned with your values

Let’s look at how to make your giving go further—for your community and your financial plan.

Why Strategic Giving Matters

With the standard deduction currently high ($14,600 for individuals and $29,200 for married couples in 2024), many people don’t benefit from deducting charitable donations unless they itemize. But that doesn’t mean your giving can’t also help you reduce taxes. By using strategies like appreciated stock donations, QCDs, and DAFs, you can:

• Lower your taxable income
• Avoid capital gains taxes
• Give in a more impactful, intentional way

Let’s break it down.

📈 Strategy #1: Donate Appreciated Stock

If you’ve owned stocks, mutual funds, or ETFs for over a year and they’ve increased in value, consider donating them directly to charity rather than selling them. Why It Works:

• You avoid paying capital gains taxes
• You get a charitable deduction for the full fair market value
• The charity receives the full value of your gift, tax-free

Example: You bought stock for $1,000, and it’s now worth $5,000. Sell it, and you may owe taxes on the $4,000 gain. Donate it directly, and you get a $5,000 deduction and pay zero taxes on the gain. ✅ Make sure the organization can accept stock donations. A Donor-Advised Fund can make this process easier.

🔁 Strategy #2: Give from Your IRA Using a Qualified Charitable Distribution (QCD)

If you’re age 70½ or older, you can donate up to $100,000 per year directly from your Traditional IRA to a qualified charity through a QCD. Why It Works:

• Satisfies all or part of your Required Minimum Distribution (RMD)
• The amount donated is excluded from your taxable income
• Keeps your Adjusted Gross Income (AGI) lower, which may reduce:
• Social Security taxation
• Medicare premiums
• Phaseouts on other deductions

Example: Your RMD is $15,000. You give $10,000 to a charity via QCD and only report $5,000 as income—saving taxes and supporting a cause you love. 💡 Especially useful if you don’t itemize, since QCDs reduce income without needing to claim a deduction. Be sure to inform your tax preparer – brokerage houses will just report the amount taken out, not that it was a QCD.

📦 Strategy #3: Open a Donor-Advised Fund (DAF)

A Donor-Advised Fund is like a charitable investment account that allows you to:

• Make a large donation now and get the full deduction this year
• Give to specific charities gradually over time
• Donate appreciated assets like stocks or even crypto

Why It Works:

• “Bunch” your donations into one year to exceed the standard deduction
• Take advantage of a high-income year to maximize the tax deduction
• Establish a legacy of giving for your family

Ideal for:

• Business owners
• High earners
• Investors with appreciated stock
• Anyone who wants flexibility in giving over time

🎯 Combine These Strategies for Even Greater Impact

You don’t have to choose just one approach. Many of our clients use a combination for tax efficiency and flexibility:

• Donate appreciated stock to a Donor-Advised Fund
• Use QCDs to fulfill your RMD each year
• Plan larger donations during high-income years

Together, these methods allow you to support charities you care about while building a tax-smart, long-term giving plan.

❤️ Giving with Impact: How to Choose Effective Charities

Now that you know how to give smarter, let’s talk about where to give. https://aiofinancial.com/effective-altruism/ Choosing where to give is just as important as how much you give. With so many nonprofits out there, it can be hard to know which ones are truly making a difference. Fortunately, several independent organizations evaluate charities based on effectiveness, transparency, and measurable outcomes—so you don’t have to start from scratch. Some of the most trusted charity evaluators include:

• GiveWell – Focuses on cost-effectiveness and proven impact, especially in global health and poverty alleviation.
• Charity Navigator – Rates thousands of U.S.-based nonprofits based on financial health, accountability, and transparency.
• Animal Charity Evaluators – Identifies high-impact animal welfare organizations using rigorous criteria.
• ImpactMatters – Evaluates how much good an organization achieves for every dollar spent (now part of Charity Navigator).

These platforms can help you identify charities that align with your values and use donations efficiently. But even with these tools, it’s important to consider some key factors when making your decision. First, look for evidence-based impact. The most effective organizations measure their outcomes and use data to refine their programs. Instead of focusing solely on overhead ratios, consider how well a charity turns dollars into real-world results—whether that’s lives saved, emissions reduced, or policies changed. Second, review a nonprofit’s transparency and accountability. Does the organization publish annual reports, audited financials, and program evaluations? Are they open about their successes and their challenges? The best nonprofits communicate clearly with donors and stakeholders. Third, evaluate the charity’s cost-effectiveness. Some programs can have exponentially greater impact per dollar than others. For example, funding mosquito nets to prevent malaria can cost less than $5 per net and save lives, while other types of giving may be far less efficient in achieving outcomes. Finally, consider the scalability and room for more funding. Some nonprofits are already well-funded or operating at capacity, while others are poised to expand and could do much more with additional resources. By combining these evaluation tools and key criteria, you can ensure your giving is not only generous—but also smart, strategic, and deeply impactful. In the sections below, we’ve highlighted several high-impact charities working across different focus areas, each with a strong track record of making a difference.

🐾 Animal Welfare

Animal suffering is widespread and often underfunded. These groups are leaders in reducing harm and promoting sustainable change:

• Animal Charity Evaluators – Independent reviews of top animal charities
• The Humane League – Works to end the abuse of animals in factory farming
• The Good Food Institute – Promotes plant-based and cultivated meat alternatives
• Faunalytics – Provides data and analysis to improve animal advocacy efforts

🌎 Climate Change

Every dollar toward climate solutions can have an exponential impact. These organizations work globally to reduce emissions and protect the planet:

• One Tree Planted – Supports reforestation projects worldwide
• Rainforest Foundation US – Works with Indigenous communities to preserve rainforests
• Burn Stoves – Builds clean cookstoves that lower carbon output and improve health outcomes

🌍 Combating Global Poverty

The most cost-effective programs in the world are tackling poverty using rigorous research and direct support:

• GiveWell – Identifies top charities based on cost-effectiveness
• GiveDirectly – Transfers cash directly to families in poverty
• Oxfam – Works globally on inequality, emergency relief, and sustainable development
• J-PAL – Evaluates social programs with randomized controlled trials
• Innovations for Poverty Action – Applies evidence to real-world poverty solutions

🧬 Saving Lives & Public Health

These nonprofits are among the most cost-effective at preventing deaths and improving global health:

• Against Malaria Foundation – Provides mosquito nets to prevent malaria
• Evidence Action – Deworm the World – Treats children for intestinal parasites
• Helen Keller Intl – Focuses on nutrition, vision, and maternal and child health

📰 Free Media & Public Awareness

Informed societies are stronger societies. These organizations promote independent journalism, free information, and public education:

• ProPublica – Investigative journalism that exposes injustice
• The Center for Public Integrity – Focuses on transparency and accountability in government
• NPR – Trusted nonprofit public media offering independent news
• Development Media International – Uses mass media to improve health outcomes
• Wikimedia Foundation – Supports free access to knowledge through Wikipedia and related projects

🧠 Final Thoughts

Whether your passion is the environment, education, public health, animal welfare, or economic justice, there’s a way to give that makes a real difference—and offers meaningful tax benefits. At AIO Financial, we specialize in personalized charitable giving strategies for individuals, families, and foundations. We’ll help you identify the most effective way to give based on your financial situation and personal values.

💬 Ready to Give Smarter?

If you’re planning a gift this year—or want to review how your giving fits into your overall financial plan—we’re here to help. ✅ Schedule a free consultation at aiofinancial.com to start building your smart giving strategy today. Let’s make your generosity go even further.

Transcription from video:

I’m going to talk about charitable giving strategies so how to maximize the tax deduction to support non profit organizations so why is it useful to be strategic because he can give more if you’re getting a tax credit for or tax deduction for it it’ll allow you to give more and support some great organizations so we’re going to talk about three strategies one is donate appreciated stock so if you sell stock that has grown in value you have to pay capital gains tax on that growth it’s usually 15% 20% if you have high real large amount of capital gains high income but usually 15% so that’s 15% less that can go to the charity if you just give them appreciated stock you don’t pay the capital gains and the charity doesn’t either it’ll go right to their brokerage account they’ll sell it they get the money without paying taxes great you do want to get long term capital gains you have to hold the asset for more than a year second one is use a qualified charitable deduction from your IRA so if you’re seventy and a/2 that’s a weird age but seventy and a/2 or older you can take money out from your IRAs or your 4 1 k or your well just any tax deferred account and uh you that reduces you’re 73 or in the future 75 and you have to do a required minimum distribution it’s about 4% a year you have to take out each year this satisfies that so the advantage when you’re seventy and a/2 is you’re giving money that you haven’t paid taxes on so if you give a couple thousand dollars from an IRA that’s money that’s not you you haven’t paid taxes on it if you take it out of the IRA it counts as as income for your taxes so if you just give it directly to the charity no taxes on that money the charity doesn’t pay taxes on it it’s great win win when you have to required distributions that’s gonna count as income and and be taxed as as income and any amount that you use let’s say you have to take 10,000 out a year um in in it will it’ll vary their age and the value of the accounts but uh that any money of that that you send to charities you don’t pay income tax on so you get a good tax deduction and if you’re just doing standard deduction this is a great way to get some credit for the charitable contributions you do have to tell your tax preparer or if you’re the tax preparer you have to remember that it went to a charity because the brokerage house is going to send you a 1099 and it’s just gonna say hey you took out $10,000 it’s not gonna say hey five of that went to a charity it’ll just have the amount that came out and how much taxes were withheld you have to record hey some of that went to a charity because Schwab or Vanguard or Fidelity they’re not gonna identify oh did this go to a 5 0 1 c 3 that’s active you have to defend that and if you get audited you just have to show hey this money did go directly to a qualified charity and I don’t have to pay taxes on it it’s great uh the third one is a advised fund so for most of us the standard deduction is is pretty high standard deduction 2025 for let’s just see for uh married couple what are we looking at um life time and credit standard here we go $30,000 single 15,000 so $30,000 for $30,000 for a married couple you get to part of that calculation is either take 30,000 or the itemized deductions you can take your real estate your house taxes mortgage interest car tags and then charitable contributions but a lot of times let’s say you’re if you have a mortgage your your taxes let’s just say 10 15,000 you still have to donate another 15,000 just to get up to that standard deduction so if I give a $10,000 a year to charity I’ll never get a a benefit from that I’ll the tax deduction if I’m just doing 10,000 a year and my itemized deduction is 15 well that gets me up to 25 but the standard deductions 30 I’m always just gonna take the standard deduction no benefit in my charitable contributions so a diet don’t a donor advised fund it’s just an account set it up at Schwab Fidelity Vanguard at any brokerage house or at a bank whatever you want to do you set it up and you can contribute to it let’s say five years of donation so I’ll put 50,000 into it well now I’m well above that standard deduction I’m gonna get a tax benefit a a a reduction a in the year that uh contribution I put my 50,000 Stoner Advice fund and it’s an account I can invest in stocks bonds I can invest in exchange trade funds mutual funds whatever I want to do and then I can distribute it over the next five years I can do my 10,000 a year over the next five years I get my 50,000 dollar tax deduction I’m getting well above the standard deduction I’m getting a benefit and then I can distribute it over the next 10 years I can distribute it and it’s really easy to distribute they have a list of what’s not list you just type in the charity if it’s a registered 5 0 1 c 3 it pops up sends a check to him great super easy to take care of and you could do that throughout the year uh it’s a great way to get some benefit for your tax for your charitable donations alright those are the three strategies you can of course combine them do appreciated stock to take money from IRAs and um yeah and do the uh advice fund oh and charity yeah that’s a good one stock can go right into the donor advice fund you don’t pay capital gains on it it’s sitting in that account and then you distribute it I mean that’s that’s a wonderful invest funds are great you can invest them safely conservatively aggressively you can use socially funds so that it’s making an impact just as an investment as well Community Investment notes you can do a lot of a lot of nice that fund as well yeah and donations you get the best benefit if you’re if you’re reducing yourself high tax bracket so if you’re in the 32% tax bracket well sure if you can reduce your income in that year you’re getting a better benefit than if you’re reducing it in a 22% tax bracket year okay great those are all good effective charities we we’ve had this question from clients just who do I to what’s a good charity to give to well it depends on what you wanna support um you can help save lives help reduce population you can help animals you can help climate changes I mean there’s a ton of there are some good charity of give well is an efficient way to help saving lives Charity Navigator is a good um option or website to evaluate it’s worth doing some research cause there are some very inefficient charities and you want your money to make as big of an impact as you can impact matters animal charity evaluator um some of the key things you Wanna look at is evidence based impact not that they’re just throwing money at different projects cause it sounds good that they’re looking at you know how they can make the impact they can transparency accountability cost effectiveness and that they can use your funds that they’re not already supported and and that they’ll put your to good use um some of the top causes there areas for animal welfare animal charity evaluators the Human League good Food Institute analytics sites that’ll help you make a good impact if you want animal welfare animal causes um causes for climate change organizations that are supposed to make or or I’ve interviewed each of these but they um have a good impact one tree planted this is for climate change Rainforest Foundation uh burn stoves trying to help with climate changes more I’m sure there’s a lot more these are three that I’ve seen or that I’ve talked to um for global poverty again give give directly you’re just giving money which is a very efficient way to support that’s probably what you should compare against your complicated project versus just uh giving directly oxfam J PEL is the poverty action laboratory they do a lot of studies uh in impact for poverty action a good organization both of these are from professors or university driven and they do a lot of um randomized studies to determine what most impact I spoke with someone from J Pal who was saying one of their biggest impact projects is just giving people business necessary equipment plus money so they don’t sell that equipment right away and then they can grow generate an income and move from there um I know aux fans sometimes you’re you’re buying a goat or or chickens or animals to be their business uh start point um and yeah the um IPA the impact for poverty poverty action they do they have a lot of nice studies for different areas uh JPEL as well for micro or for different types of projects to uh see what will make the biggest impact and I think that’s that’s key is again you’re the money on taxes so you can give more but you want to make sure that money is doing something helpful to the types of causes you want to do and I’d actually put JP and IPA I know they’re in global poverty but they really help evaluate in a lot of different areas saving lives malaria deworming Helen Helen Institute for Free Media NPR is on this list Propublica Wikimedia DMI and center for Public Integrity and these are just some ideas you know research what what drives you motivates you what you wanna see doing better uh political contributions are not tax so it it’s kind of a separated that’s just money that you’re giving not um you’re not getting any for it at least at this point a strategic giving you want a good impact plus the tax savings gives you the biggest impact let us know AIO Financial we are fee only financial planners we’re fiduciaries we specialize in socially responsible investing and we work a lot with expats um yeah let me know if you questions any comments I appreciate it

The post Smart Gifting Strategies appeared first on AIO Financial - Fee Only Financial Advisors.