A Comprehensive Guide to Charitable Giving Strategies
For many, charitable giving is driven by deeply personal values – but the decisions that surround it aren’t always simple. With so many ways to give and tax rules to consider, it can be difficult to know where to start.
Below is a guide that breaks charitable giving down into its core building blocks – what you can give and how you can do it – so you can understand your options and approach giving with greater confidence.
What You Can Give
There are many ways to support the causes you care about, and the type of asset you give can shape both your impact and your overall financial picture.
Cash
While cash donations are often the simplest and most familiar way to support charitable organizations, they are typically the least tax efficient. Cash gifts – whether made by check, electronic payment or credit card – are immediately usable by the organization, which can be helpful when organizations are addressing urgent needs. For donors who make smaller, recurring contributions, cash can still play a role in a broader giving strategy. However, it’s just one of many options available – and giving other assets may offer additional benefits, like greater tax efficiency or the ability to amplify your impact over time.
Securities
Appreciated Stock
Once you’ve held investments for more than 12 months and they’ve increased in value since they were purchased, you can gift those shares directly to charity. Rather than selling the investment first and donating the proceeds, giving shares allows the organization to sell the holding itself – so more of the value can go toward supporting its mission, rather than being reduced by capital gains taxes before the gift is made.
Gifting appreciated stock can be especially effective when you want to support charitable causes without drawing down your cash reserves. And because the value of the stock is based on its current market value, this approach may also increase the charitable deduction you’re able to claim.
Mutual Funds
Similar to appreciated stock, donating mutual fund shares follows the same general principles around giving shares rather than cash. Unlike individual stocks, though, mutual fund gifts are typically processed through the fund company that holds the investment, which can influence whether a charity can accept the shares and how the transfer is handled.
Employee Stock
If you’ve been participating in an employee stock purchase plan (ESPP) or another form of company stock ownership, those shares can also be donated to charity. Often, these holdings are owned for more than 12 months – and may grow into a larger-than-intended portion of your overall investment mix. Because of this, donating employee stock can help you support a charity while addressing concentration in your portfolio.
Tangible Assets
Assets like real estate, vehicles, artwork or other personal property can also be donated to charity. From a tax perspective, tangible assets are treated differently than cash or stock. Depending on the type of property and the organization receiving it, the charitable deduction may be limited and is often not based on the asset’s full fair market value. However, unused deductions may be carried forward to future years. Because of these differences, donating tangible assets may be more effective when considered as part of a broader charitable plan than as a simple one-time gift.
How You Can Give
Charitable giving decisions often involve more than choosing what to give – timing and structure play a key role as well.
Strategies
These approaches focus on timing your gifts to better align with your income, tax deductions and goals.
Bunching
Bunching is a charitable giving strategy that involves combining multiple years’ worth of donations into a single year. Rather than giving the same amount to charity every year, you would make a larger gift in one year and give less – or none at all – in the following year or years. By doing this, you can make your donations exceed the standard deduction in the year of the larger gift, allowing you to itemize your deductions (and potentially reduce your taxable income). Then, you can take the standard deduction the next year.
If you consistently give to charity, but don’t consistently itemize your deductions, this strategy could prove effective for you. Especially after the most recent reconciliation bill permanently increased the standard deduction, fewer people may be able to itemize each year. This makes bunching more relevant for maximizing the impact of your charitable gifts without increasing the total amount you give.
Qualified Charitable Distributions (QCDs)
When you donate through a QCD, you send money directly from your IRA to a qualified charity. You can do this once you reach age 70 ½. When you make a gift this way, the amount you donate is excluded from your taxable income – so you don’t even need to itemize your deductions to receive a tax benefit.
Another perk of QCDs is that they can count toward satisfying your required minimum distribution (RMD) for the year. In 2026, you can give up to $111,000 per year through QCDs – though gifts must be made directly to a public charity, as donations to donor-advised funds or private foundations do not qualify.
Structures
In some cases, charitable giving can best be done through dedicated accounts that help organize and distribute gifts over time.
Donor-Advised Funds (DAFs)
A donor-advised fund is a charitable account you create with a sponsoring organization that holds cash or other assets until they are distributed to charities. Once you contribute assets to a DAF, they are invested and held over time by the sponsor. Then, you can recommend distributions from the account to eligible charities, and the sponsoring organization reviews those requests and, in most cases, sends the funds to the charities you’ve recommended.
Contributions to a DAF are treated as charitable gifts in the year the assets enter the fund, even though the money may be distributed to charities later. This can make DAFs an effective option if you want to be intentional about the timing of your charitable deductions, support organizations over multiple years or coordinate giving with other strategies like bunching.
Private Foundations
A private foundation is a charitable trust or nonprofit corporation – primarily funded by you or your family – that holds your assets and makes donations directly to organizations. When you contribute assets to a private foundation, they move out of your taxable estate and into the foundation, which you or your family oversee. The foundation then distributes the funds to charities according to its guidelines.
While assets donated to a private foundation are only deductible for up to 30% of your adjusted gross income (AGI), the foundation’s officers (likely your family) have full discretion over where the donations go – and they’re not limited to 501(c)(3) charities. Because of this, they may be effective for families who want a high degree of control over how their charitable assets are invested and distributed – and can become part of a long-term charitable giving plan.
Charitable Remainder and Charitable Lead Trusts (CRTs and CLTs)
Charitable Remainder and Charitable Lead Trusts are trusts that allow your assets to benefit both charities and other beneficiaries over time. When you contribute assets to one of these trusts, they move out of your taxable estate and are managed according to the trust’s terms. With a CRT, income is paid to you or another beneficiary over a set period of time, and the remaining assets are distributed to charity. With a CLT, charities receive the distributions first – and the remaining assets pass to your beneficiaries at the end of the trust term.
Because these trusts can allow appreciated assets to be sold without an immediate tax hit, they can be effective if you want to support charitable causes while still receiving income for your family.
When it comes to charitable giving, no single strategy is right for every situation. Factors like your income, tax considerations, timing and long-term goals all play a role in determining which approaches may work best for you. Adding to that complexity, tax laws are always changing. By working with your Baird Financial Advisor team, you can explore the available options, stay up to date with legislation and choose a strategy that aligns with the causes you care about and your broader financial picture.
Editor’s Note: This article was originally published September 2022 and was updated April 2026 with more current information.
This information has been developed by a member of Baird Wealth Solutions Group, a team of wealth management specialists who provide support to Baird Financial Advisor teams. The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.
