How to Maximize Charitable Giving

A woman sits on the floor, preparing a box for donation to charity.

Six out of 10 households give to charity each year, according to PhilanthropyRoundtable.org. Giving to education charities tops the list, followed by donations to human services charities and foundations.

With so much good work going on, the beginning of the year is a great time to reevaluate your charitable giving plan and how to give most efficiently. There are a variety of things you can do to boost the power of your charitable giving—read below for some suggestions.

Get Your Company Match

Some employers match the donations that their employees give to charity, essentially doubling the power of your contribution. Before you donate, ask your human resources department if this is something they participate in. And if they do, make sure you follow the proper channels to get your donation matched.

Bunch Your Contributions

Now that the standard deduction has gone up, you’ll need more deductions before it makes sense to itemize. (In other words, you may not get a deduction for your charitable contributions if your total deductions don’t exceed the standard deduction.) If you like the tax break, consider grouping contributions together to give a larger amount every two to three years instead of a smaller amount annually.

Create a Donor-Advised Fund

Another way to get the tax break now but give to charities over time is to create a donor-advised fund. This allows you to give a larger amount this year (and take the tax deduction) and parcel out contributions from the donor-advised fund over time. So you could put $15,000 into a donor-advised fund now and give your favorite charities $5,000 annually over the next three years.

Give Your Winning Stocks to Charity

Do you have any equities that have done particularly well? Consider gifting them to charity instead of giving cash. They’ll get the full value of the stock, and you can claim the full value as a charitable contribution, but you won’t owe capital gains tax on the stocks’ increase in value. (Note: These should be stocks you’ve held for more than a year if you wish to deduct the current fair market value.)

Sell Losing Stocks and Give the Cash to Charity

While gifting winning stocks to charity is a win-win for everyone, giving a charity your losing stocks isn’t ideal. Sell the stocks first and give the charity the cash—you’ll be able to deduct the value of your donation and claim the losses against any other gains in your portfolio.

Donate Your Required Minimum Distribution

Are you obligated to take a required minimum distribution from an IRA this year, but you’d rather not? You can donate the entire distribution (or part of it) to charity and it won’t count as retirement income on your taxes. (You can’t count it as a charitable contribution, but you won’t be taxed on the income, either.)

Time Your Giving Against Income

If your income fluctuates, make sure you give in years when your income is higher, since you’ll get a larger tax break on deductions. For instance, if you know you’ll be in a higher tax bracket this year than next year due to a large work bonus or other circumstances, it’s more beneficial to get the tax deduction now.

Be Selective

There are a lot of great causes out there, but giving 20 separate $100 contributions won’t make as much of a difference to 20 organizations as two $1,000 contributions to two charities. Use a site like CharityNavigator to make sure you’re giving to worthwhile organizations and choose just a few spots for your hard-earned cash.

In the end, there are many ways to make your charitable giving count. With some planning and potentially the help of a financial advisor, you can make sure that you make the most out of your good work.

The views expressed by the author are not necessarily those of Fifth Third Bank, National Association, and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, Member FDIC.