Charitable Gifting in 2025

For those who are charitably inclined, the world of Financial Planning looks to optimize giving, allowing more individuals to give to meaningful causes instead of Uncle Sam. 

I would first refer to you a detailed and thorough observation on Tax-Efficient Charitable Giving, outlined in 2022 by Verum Adviser, Bret Tagg, Tax-Efficient Charitable Giving - Verum Partners. Bret expertly covers (1) bunching deductions, (2) donating appreciated securities, (3) utilizing Qualified Charitable Distributions (QCDs), and (4) forming a charitable trust. Three years later these observations remain eminently relevant. 

In this article, I want to first provide a brief update as to where we stand in 2025 regarding Charitable Giving. Second, I want to take a closer look at the appealing practicality of gifting appreciated securities through a donor-advised fund (DAF). Third, I will conclude with a thought about when it makes sense to convert from donating appreciated securities to making Qualified Charitable Distributions (QCDs). 

Tax Efficient Charitable Gifting in 2025

Over the past few years, major players like Fidelity, Schwab, Vanguard, and community foundations such as Foundation For The Carolinas have entered the charitable giving space in a meaningful way. Specifically, they have worked to make giving appreciated securities through a DAF easy, more broadly understood, and the giving tool of choice for donors, advisers, and recipients alike. Groups like Fidelity Charitable have reduced minimums to open and fund accounts, vastly expanded their catalog of available charitable organizations, and made electronic transfer accessible for recipients.

A donor-advised fund is a private account created to manage and distribute charitable donations on behalf of an organization, family, or individual. Donor-advised funds have become increasingly popular, as they offer the donor greater ease of administration while still allowing them to maintain significant control over the timing, placement, and distribution of charitable gifts.

Directly correlated with people’s charitable giving appetites is the Standard Deduction. The Standard Deduction for a married couple filing jointly is $30,000 in 2025 (single $15,000). Therefore, the hurdle for eclipsing Standard Deduction levels through mortgage interest and charitable giving remains more than double that of the Standard Deduction before the Tax Cuts and Jobs Act of 2017. It seems likely that the Standard Deduction will only continue to increase with new tax legislation on the table. This shines the spotlight on donating appreciated securities because, in addition to being able to claim a charitable deduction, there is the added benefit of avoiding capital gains tax when appreciated securities are donated. 

Donor Advised Funds and Appreciated Securities

 The graphs below provide a digestible breakdown of the benefit of giving appreciated securities compared to making a cash gift. 

Using this appreciated securities gifting technique, you would start by looking at the most highly appreciated position in your brokerage account. In this example, you would “skim” $100,000 off that appreciated security and make a gift. As my colleague Chris Gammon likes to say, the DAF allows you to “skim the excess cream off the top.”

While using a DAF is not the only way to give appreciated to securities, it has become increasingly more accessible to utilize. The mainstream DAFs like Fidelity, Schwab, and Vanguard will allow the donor to take specific “lots” directly from brokerage investments and place them into a DAF. This ensures that you are donating the most highly appreciated securities in your portfolio. With Fidelity, Schwab, and Vanguard all offering DAFs, this transfer process feels as easy as moving money from a checking to a savings account.

The moment you have put securities into your DAF, you have made the charitable donation for tax purposes. You get your $100K charitable deduction and you never pay capital gains tax on those appreciated securities. But you can take years to make grants to the end non-profits you want to benefit. The DAF will allow you to reinvest those contributed dollars. So, if you aren’t committed to making an immediate grant, you can let the funds sit and grow within the DAF, potentially enabling you to make an even larger grant when the time comes. If you don’t have the appetite for the “donation dollars” in your DAF to be exposed to the equity or bond markets, you can leave the funds in cash. As of June 2025, cash has an appealing ~4.0% upside

Now the fun part: you get to give to your favorite charity or charities right from an app or a website. The beauty of the DAF is that while it is good for making singular large donations, it’s also wonderful for making a flurry of smaller donations. For the “as needed giver,” you can take out your app at the fundraising luncheon and make your donation with just a couple of clicks. If your organization is not already represented in the giving catalogs you can request that it be included and Fidelity, Schwab, or Vanguard will execute due diligence and add as appropriate. Additionally, you can set up monthly recurring charitable gifts or automatic annual donations. When using a DAF, be sure to check your fund guidelines for minimum donation requirements. For example, as of 2025, Fidelity requires you to make at least one $50 donation out of a DAF every 2 years.  

Anecdotally, my wife and I agreed to start out 2025 by skimming $1,000 off our appreciated S&P 500 ETF and into our DAF. During my brother’s lacrosse season, they were raising money for the Wounded Warriors Project. I was able to jump into my app and make a $100 grant on behalf of my brother’s specific fundraising campaign with a couple of taps. The DAF is great for planned giving and ad-hoc giving alike. 

Donor Advised Fund (DAF) to Qualified Charitable Distribution (QCD).

Another way to donate tax-efficiently is through a Qualified Charitable Distribution (“QCD”). A QCD is a transfer from your IRA to charity and is available to those age 70½ and older. QCDs are utilized to minimize your Required Minimum Distributions required for IRAs. Once you turn 73 or 75, depending of date of birth, you must take an RMD every year which is taxable at ordinary income rates. QCDs of up to $108,000 (2025) will be subtracted against that RMD. At age 73, it could make sense to convert giving from a DAF to giving through QCDs. Because the government forces you to take money out at age 73, directing some of those dollars toward giving reduces your ordinary income. Oftentimes, if you’re taking the Standard Deduction, then making a QCD is best, while if you are itemizing deductions, then donating appreciated securities could be optimal.  

The takeaway here is that if you don't already use a Donor Advised Fund for charitable gifting you should strongly consider opening one. If you were ready to give $10,000 in cash this year to charity but have highly appreciated securities that could be sold into a DAF, you can make your donation using appreciated securities and then take that $10,000 of cash and reinvest in the securities you used for donating. This serves to reset the basis of your investment, while avoiding Capital Gains Tax and donating to your cause. 

If you have charitable intent, a way to make your donations the most tax-efficient they can be is by donating appreciated securities through a DAF or making a QCD. Work with a financial planner to help effectively implement the strategies that would be most beneficial to your situation.

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