Smart Giving: How to Optimize Your Donations Before Year-End

As we approach the end of the year, many of us reflect on how we can give back to the causes we care about. Whether it’s supporting local communities, funding education, protecting the environment, or strategically planning to reduce taxes or estate liabilities, giving is one of the most impactful ways to make a difference.

Year-end giving is especially powerful because it aligns with key financial opportunities, such as tax deductions and estate planning benefits. For many, December represents a unique chance to maximize these advantages while supporting a cause.

In the 2012 study "Feeling Poor, Acting Stingy: The Effect of Money Perceptions on Charitable Giving," researchers explored how an individual’s perception of their financial situation influences their willingness to donate to charitable causes. This study highlights the critical role that subjective financial outlook, rather than actual wealth, plays in shaping philanthropic behavior.

Individuals who perceive themselves as financially insecure are less likely to make charitable donations, regardless of their actual financial status.

Yet despite the many benefits of charitable giving, some individuals may feel reluctant to part with their assets. These feelings are natural and often tied to how we emotionally connect with our possessions. To address these concerns and maximize the impact of your generosity, here are three tax strategies to help you make the most of your charitable donations.

Qualified Charitable Distributions (QCDs) allow IRA owners aged 70½ or older to transfer up to $105,000 (2024 limit) annually to a qualified charity tax-free. QCD is a direct transfer of funds from an Individual Retirement Arrangement (IRA) to a qualified charity and it can count toward satisfying Required Minimum Distributions (RMDs) for the year if specific criteria are met, offering a tax-efficient way to support charitable causes.

Donating appreciated stock is a strategy to avoid capital gains taxes and, if applicable, the Net Investment Income Tax (NIIT), while also claiming a deduction for the stock's fair market value. Deductions for donations to public charities are generally capped at 30% of your Adjusted Gross Income for appreciated non-cash assets. If your contributions exceed this limit, you can carry the excess forward for up to five years, making it a flexible tool for managing charitable giving and taxes efficiently.

Lump sum donation If your anticipated itemized deductions are close to the standard deduction, consider bunching charitable contributions from multiple years into one tax year. This strategy allows you to itemize deductions in the current year and take the standard deduction in subsequent years, potentially resulting in a greater combined tax benefit. 

Working with a financial advisor ensures your donations are structured to align with your philanthropic and financial goals, minimizing tax liabilities while maximizing impact. At WGCA we understand the complexities of tax-efficient charitable giving and are here to help you navigate these strategies.

Sincerely,

Stefani Tueme

Associate Financial Advisor

About Wolf Group Capital Advisors

At Wolf Group Capital Advisors, a comprehensive wealth management firm and Registered Investment Advisor (RIA) based in the Washington, D.C. metropolitan area, nothing is more important than the fiduciary responsibility we have in managing your wealth. Taking the utmost care, we focus on providing advice tailored to your specific circumstances. With more than two decades advising U.S. expatriates and non-US citizens employed by international organizations, we are qualified in investment strategies addressing global issues. Empathy and curiosity—combined with our experience in life planning and investment management—enable you to explore a wider set of possibilities that can lead to a fulfilling life you’ve worked hard to attain.

Disclosure:

The views expressed represent the opinions of Wolf Group Capital Advisors as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.  

Diversification and asset allocation do not ensure a profit or guarantee against loss.

The information presented is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.