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Are You Making the Most of Your Charitable Donations?

Key Points
  • Being strategic about your charitable donations—especially around the holidays—can make giving more effective and personally rewarding.

  • To focus your giving, narrow down your list of charities according to your personal interests, your community and where you can make the most difference.

  • While charitable donations are still tax-deductible, to get a tax break you'll need to be more strategic about how you give as well as what you give.

Please note: This article may contain outdated information about RMDs and retirement accounts due to the SECURE Act, a new law governing retirement savings. The SECURE Act may impact investors nearing- or in retirement, new parents, small business owners and employees. For more information about the SECURE Act, please read this article or speak with your financial consultant.


Dear Readers, 

When it comes to charitable giving, the holidays can sometimes challenge your feelings of generosity. Yes, it's the season of sharing, but it can also be overwhelming as you're approached by an increasing number of organizations asking for donations. How do you decide which causes to support? Plus if you're concerned about getting a tax deduction for your contribution, the higher standard deduction that was established by the new tax law makes it a little more difficult.

So how do you make the most of your charitable contributions? You have to be strategic. Whether your donations are large or small, here are some ways to give meaningfully, stay true to your budget and to yourself—and possibly get a tax break too.

Personal strategies for giving

Just because you can't give to every worthy cause, there's no reason you have to feel like Scrooge. With a little strategic planning, you can choose both the best place and the best way to share your good fortune during the holidays and year round.

  • Start with what's important to youDo you have a particular passion such as the arts, the environment or education? Is there an organization that has made a difference in your life? Giving to a cause that has a personal meaning can be both effective and rewarding.
  • Look to your own communityMaking a financial contribution that will not only benefit a cause you believe in but also have a local impact can give your donation extra meaning. Consider a local food bank, a scholarship fund for a neighborhood school or a struggling homeless shelter in your city.
  • Narrow down your listChances are you can't give to every charity on your list, so next think about where your donations will make the most difference and choose the top three. Consider doing a little extra research by comparing charities at an independent online rating service such as or before you make your final choices.
  • Apportion your money accordinglyDecide on an overall dollar amount you can afford, and then decide how to distribute it. You don't have to give the same amount to each charity nor do you have to give all the money at once. Many organizations welcome small regular contributions over time.

Getting a tax benefit for your contributions

Charitable contributions are still tax-deductible; however, you have to itemize to get the benefit. With this year's higher standard deduction ($12,000 for a single filer, $24,000 for married filing jointly)—plus the reduction or elimination of many other itemized deductions—it's a bit more of a challenge to get total deductions above that limit. Consequently, a lot of people will choose the standard deduction rather than claim the charitable deduction.

One possible solution is to give a larger amount every two or three years to help push you over the standard deduction rather than a smaller amount every year. This would increase your deductions in the year you make your charitable contributions.

Two tax-smart ways to give

Hopefully, people will continue to give regardless of the tax situation, but if tax advantages are an important part of your charitable-giving strategy, here are a couple of other ways to go about it.

  1. A donor-advised fund (DAF) is one of the easiest, tax-advantaged means of giving to charity. It's more of an initial financial commitment but the ongoing benefits to you and the charities of your choice make it worth considering. It generally takes a minimum of $5,000 to open a donor-advised fund account; however, you may qualify to get an immediate tax deduction for the entire amount, if you itemize. If you donate appreciated assets, you could not only get a tax deduction, but also potentially avoid having to pay capital gains taxes. You then use the funds to make grants to any public charity and any money not immediately distributed can be invested, potentially increasing the amount available to give. To me, if you have the means, it's a great way to make an upfront contribution that you can then strategically manage over time. Plus, you can do most of it online—and have easy access to your giving history.
  2. A qualified charitable distribution (QCD) from an IRA is another option for retirees who are 70½ and older and have to take a taxable required minimum distribution (RMD) each year. This necessity can be turned into a tax advantage by making a direct contribution from an IRA to a qualified charitable organization. For example, if your required minimum distribution is $10,000, and you make a $5,000 qualified charitable distribution, you would only have to withdraw and pay taxes on $5,000 to satisfy your required minimum distribution for that year.  If you are able to leverage the qualified charitable distribution rules, you can potentially avoid paying taxes on IRA distributions of up to $100,000 a year.While the contribution doesn't qualify for a charitable deduction, it's not considered taxable income, so there's no income tax on it.

Making a difference

As you may have heard me say before, I believe philanthropy should be a part of everyone's financial life. It's not how much you give but rather the act of giving itself that's important. I encourage you, especially during the holidays, to make a commitment to help others. And as I wrote in a recent column, get your family involved as well. Whether you give a lot or a little, contribute money or time, by sharing what you have today you're making a difference and investing in a better tomorrow for everyone.


Have a personal finance question? Email us at Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries, contact Schwab.

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A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation. Consult your tax advisor for more information.



The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

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