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Charitable Giving

We can help you support your favorite causes while getting the benefits of the exchange.


Giving to your favorite charity can be very rewarding. We can help you determine a suitable strategy to fulfill those goals.

Plus, gifts to charity are one of the best tax-saving opportunities available. Not only does the charity itself benefit, but the taxpayer receives a tax deduction, at least to a certain limit. We offer several tools, such as donor-advised funds, qualified charitable distributions from IRAs in leu of required minimum distributions, charitable trusts or gifting appreciated assets in-kind.

Expand each section for more details.
A donor-advised fund (DAF) is a private fund administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. They are a simple, flexible, and efficient way to manage your charitable giving.

Donor-advised funds have become increasingly popular, primarily because they offer the donor greater ease of administration, while still allowing him or her to maintain significant control over the placement and distribution of charitable gifts. In addition, companies can offer this service to clients with fewer transaction costs than if the funds were handled privately. A DAF allows you to deposit money into an account now, receive the tax benefit and then make the donation at a later date. You can fund a DAF with appreciated asses such as stocks with a low basis.

Donor-advised funds democratize philanthropy by aggregating multiple donors and processing high numbers of charitable transactions. This process lowers financial barriers to entry and makes it possible for individuals with as little as $5,000 to participate in the giving process.

Furthermore, donor-advised funds offer abundant tax advantages. Unlike private foundations, donor-advised fund holders enjoy a federal income tax deduction of up to 50% of adjusted gross income for cash contributions, and up to 30% of adjusted gross income for the appreciated securities they donate.

When donors transfer assets such as limited partnership interests to donor-advised funds, they can avoid capital gains taxes and receive immediate fair-market-value tax deductions. According to the National Philanthropic Trust, donor-advised funds have become an increasingly efficient method for donating to causes.

*LPL Financial and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
A charitable remainder trust is a tax-exempt irrevocable trust designed to reduce the taxable income of individuals by first dispersing income to the beneficiaries of the trust for a specified period of time and then donating the remainder of the trust to the designated charity. This is a “split-interest” giving vehicle that allows a trustor to make contributions, be eligible for a partial tax deduction, and donate remaining assets.

A central idea of a charitable remainder trust is to reduce taxes. This is done by first donating assets into the trust and then having it pay the beneficiary for a stated period of time. Once this time-frame expires, the remainder of the estate is transferred to the charities deemed as beneficiaries.

Charitable remainder trusts are irrevocable. This means that they cannot be modified or terminated without the beneficiary's permission. The grantor or trustor, having transferred assets into the trust, effectively removes all of her rights of ownership to the assets and the trust upon creation of its irrevocable status. In contrast, a revocable trust allows the grantor modifications.

This charitable giving strategy also enables people to pursue philanthropic goals while still generating income. In addition to tax management, charitable remainder trusts can offer benefits for retirement and estate planning.

*LPL Financial and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
Do you own stocks, bonds, mutual funds or other market securities which have appreciated in value since their purchase? How about land, rental property, real estate or a business?

Appreciated assets such as these are usually subject to long term capital gains tax when sold. This tax can range from 15 to 23.8 percent. Add state tax and depreciation recapture, and the rate could go as high as 30 to 40 percent. Donating an appreciated asset (all or part) prior to sale, you bypass the capital gains tax. You also receive an income tax deduction on the value of the donation.

Funds can be distributed immediately. Or, you can set up a Donor Advised Fund and distribute the funds over time. It’s your choice. Appreciated assets are expensive to sell. But because of the preferred tax treatment, they are ideal for charitable donations. This can dramatically reduce the cost of making a charitable gift or increase the amount you can afford to give.

*LPL Financial and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
QCD rules allow the owner of a traditional IRA or an inherited IRA who is over age 70 ½ to direct a distribution up to a fixed amount to a public charity without taking that distribution as income. The maximum permitted QCD amount is indexed for inflation: the limit is $111,000 for 2026. Each spouse who is over age 70 ½ can make their own QCD from their own IRA. The distribution counts toward your required minimum distribution (RMD) from the IRA for the year, but you can make a QCD of up to $111,000 even if your RMD is less than that amount or if you have no RMD because of your age. Note that the age of eligibility for a QCD is still 70 ½, even though the SECURE and SECURE 2.0 acts raised the required beginning date for RMDs from an IRA. 

The QCD offers tax benefits that can be more significant than other kinds of charitable gifts. You may exclude the amount from your gross income even if you take the standard deduction (i.e., if you do not itemize your deductions). This can be more valuable than a deduction because the amounts are not included in your modified adjusted gross income (MAGI), which is used to calculate your eligibility for other tax credits, including the child tax credit and credits for the elderly or permanently disabled. MAGI also determines the amount of any Medicare Part B and Part D premium surcharges and whether you are entitled to certain deductions, such as the increased SALT cap or the deduction for overtime income. The exclusion of a QCD from the taxpayer’s MAGI makes it more advantageous from an income tax perspective than withdrawing assets from the IRA (which makes them part of your income and thus MAGI) and then making a charitable gift.

Impact Of OBBBA

QCDs are even more attractive after OBBBA for several reasons. First, OBBBA extended the higher standard deduction. This means that fewer taxpayers will itemize deductions and benefit from a separate charitable contribution deduction. A QCD is an exclusion from income and not a deduction. Furthermore, under OBBBA, for taxpayers who itemize, charitable donations of up to 0.5% of the taxpayer’s AGI are not deductible, and the benefit of the deduction is reduced by 2% for those in the top (37%) tax bracket. Neither of these limits impacts the tax benefits of a QCD.  

Charitable donations: Cash vs. QCD

Taking your full RMD and then donating cash could result in a higher tax bill than if you were to give through a QCD. Let's look at an example of when a QCD could make sense. Say you're 75 years old and single, and you need $200,000 in income this year to cover your living expenses. Your RMD for the year is $150,000 and you'll receive another $75,000 of other taxable income from interest, dividends, pension and Social Security—pushing your total taxable income to $225,000. That leaves you with an additional $25,000 of income that you don't need to provide for your living expenses.

If you're charitably inclined, you could donate the excess cash to your favorite charity and write-off the amount on your tax return (scenario 1). But by using a QCD to transfer the $25,000 directly to a charitable organization, you would reduce your taxable income by $19,275 (scenario 2).


 
 
 
Scenario 1
(RMD + Cash Donation) 
 Scenario 2
(Donate $25,000 of RMD to charity using a QCD
Other Taxable Income $75,000 $75,000
RMD $150,000 $150,000
Cash to Charity $25,000
QCD -- $25,000
Itemized Deduction $23,875 --
Adjusted gross income $225,000 $200,000
Standard Deduction -- $18,150
Taxable Income $201,125 $181,850
 

Note: This hypothetical example is only for illustrative purposes. The estimated tax impact and discussions herein are not intended as tax advice. 

For scenario 1, itemized deduction assumes the cash donation only and also applies the 0.05% floor in charitable donations. No other itemized deductions are included.

For scenario 2, the standard deduction in 2026 for a single filer age 65 or older is $18,150 ($16,100 standard deduction plus $2,050 additional standard deduction). The temporary senior tax deduction does not apply due to the income phase out limits, and the charitable giving deduction cannot be taken because the donation was made through a QCD, not cash.

Bottom line on QCDs and taxes

You don't necessarily want to give away money just to get a tax break. But if philanthropy is already part of your financial plan, a QCD can be a great way to optimize the tax benefits of giving. Your financial advisor and tax professional can help make sure your giving strategy aligns with your retirement goals as well as any changes to tax rules.


*LPL Financial and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.