Tax-Smart Philanthropy in 2024: Optimizing Your Giving While Minimizing Taxes
April 4, 2024
As your investment advisors, we understand your desire to support worthy causes while making the most of your financial resources. Fortunately, tax-smart philanthropy allows you to achieve both goals. Let’s explore strategies for maximizing your charitable impact in 2024, considering the latest tax regulations and outlining common giving scenarios.
Understanding Charitable Deduction Limits
The Internal Revenue Service (IRS) sets limitations on the amount of charitable contributions you can deduct from your taxable income. These limits are based on your filing status and the type of donation:
- Cash Donations: The maximum deduction for cash contributions is 60% of your Adjusted Gross Income (AGI) in 2024.
- Appreciated Non-Cash Assets: Donating appreciated non-cash assets held for more than a year, such as stocks or real estate, allows you to avoid capital gains tax on the appreciation while potentially claiming a charitable deduction for the asset's full fair market value. The deduction limit for non-cash assets is 30% of AGI.
Strategies for Tax-Smart Giving:
Here are several effective strategies to consider:
- Donating Appreciated Assets: As mentioned earlier, donating appreciated assets held for more than a year allows you to bypass capital gains taxes while potentially receiving a full deduction. This strategy is particularly beneficial for assets with significant appreciation.
- Bunching Donations: If your charitable contributions typically fall below the deduction limit, consider "bunching" them. This involves grouping multiple years' worth of donations into a single tax year. This strategy is best suited for those who itemize deductions and have fluctuating income levels.
- Qualified Charitable Distributions (QCDs): Individuals aged 70 ½ or older with traditional IRAs can make tax-free Qualified Charitable Distributions (QCDs) of up to $105,000 in 2024 directly to qualified public charities. This strategy can be particularly helpful in reducing required minimum distributions (RMDs) and lowering taxable income.
- Charitable Remainder Trusts (CRTs): A Charitable Remainder Trust (CRT) allows you to receive income from a trust for a set period or for your lifetime, with the remaining assets going to a designated charity. This strategy can generate income while providing a future tax benefit for your beneficiaries.
Common Strategies with Tax Benefits:
- The Retiree with Appreciated Stock: John, a retired investor with a significant amount of appreciated stock, wants to donate to his alma mater. Donating the appreciated stock directly allows him to avoid capital gains tax and potentially claim a full charitable deduction for the stock's value.
- The High-Earner with Fluctuating Income: A high-earning professional with fluctuating income may donate to various charities throughout the year. In years with lower income, the contributions may not reach the deduction limit. By "bunching" donations every other year, they may maximize her charitable deductions.
- The IRA Owner Facing RMDs: A retiree with a traditional IRA facing RMDs, wants to make a significant charitable contribution. He can utilize a QCD to donate directly from his IRA to a qualified charity, reducing his taxable income and satisfying a portion of his RMD.
- The Couple Leaving a Legacy: Clients nearing retirement want to ensure a portion of their estate goes to charity. They can establish a CRT, receiving income from the trust during their retirement years. Upon their passing, the remaining assets will be distributed to their chosen charity, reducing their taxable estate.
Maximizing Your Philanthropic Impact
Beyond tax benefits, consider these additional tips for maximizing your impact:
- Research Charities: Choose charities whose missions align with your values and ensure they operate efficiently.
- Consider Non-Monetary Donations: Donating skills, time, or resources can be just as valuable as financial contributions.
- Plan for the Future: Incorporate charitable giving into your long-term financial planning to ensure sustained support for your chosen causes.
Seeking Professional Guidance
As your registered investment advisor, we are dedicated to helping you achieve your financial goals, and that includes supporting the causes you cherish. While the strategies outlined here provide a framework, your philanthropic journey is unique. To ensure you maximize your charitable impact while optimizing your tax benefits, we highly recommend scheduling a personalized consultation. Together, we can tailor a tax-smart giving plan that aligns with your financial situation, philanthropic values, and long-term goals. Let's create a legacy of generosity while ensuring your financial security.
Please feel free to reach out for further discussion or clarification on these matters. Thank you for the opportunity to serve you and your family and to collaborate with you for—Wealth Management for Life!
The big news today: the Federal Reserve cut interest rates by 25 basis points , lowering the federal funds target range to 4.00%–4.25% . This is the first rate cut since 2023, and it marks what could be the beginning of a new easing cycle. Chair Powell acknowledged that the labor market is showing signs of strain —job growth has slowed, unemployment has edged higher—while inflation, though still above target, has been gradually moderating. One member of the committee even pushed for a larger 50-point cut, underscoring the growing concern about keeping the economy on stable footing. Markets largely anticipated this move, and that helped set the tone for the week. The S&P 500 and Nasdaq hit new record highs earlier in the week , reflecting investor optimism that lower rates will support growth. Small-cap stocks also enjoyed a bounce, showing that confidence wasn’t limited to the mega-cap names. At the same time, Treasury yields fell toward 4% before inching back up, a sign that bond investors are weighing both the near-term relief of rate cuts and the longer-term risk that inflation remains sticky. Economic data released this week helped frame the Fed’s decision. August inflation readings came in a touch hotter than expected , with headline CPI up 2.9% year over year and core inflation at 3.1%. Those numbers are still above the Fed’s target, but not high enough to derail its decision to pivot toward easing. Meanwhile, energy prices moved higher on global supply concerns, giving the energy sector a lift, while technology—especially companies tied to AI—continued to outperform. Beyond the numbers, politics are adding a layer of uncertainty. Recent controversies around Fed appointments and legal challenges to sitting governors have raised questions about the central bank’s independence. Markets are watching closely to see whether these distractions influence policy direction. Globally, other central banks, including Canada’s, have also begun shifting to more accommodative stances, reinforcing the sense that the next phase of policy is easing across major economies. So what does this mean looking ahead? Markets could see more upside in the short run , especially in interest-rate sensitive areas like housing and consumer spending. But investors should also prepare for continued volatility —each new jobs or inflation report has the potential to swing sentiment quickly. If inflation proves stickier than hoped, long-term Treasury yields could rise even as short-term rates fall, a dynamic that might pressure parts of the financial sector. In short, the path ahead is unlikely to be smooth, but the Fed has signaled it is prepared to act again, with two additional cuts projected before year-end. Bottom line : The Fed has taken its first step toward easing, reflecting concerns about growth while balancing persistent inflation risks. Markets are encouraged, but optimism remains cautious as investors adjust to a more complex mix of risks and opportunities. As always, we welcome your questions and are here to support you. At the heart of everything we do is our commitment to Wealth Management for Life —providing enduring guidance for you and your family’s financial success.
The market’s summer calm may be giving way to a more dynamic period. In the weeks ahead, jobs data, inflation reports, tariff developments, and Federal Reserve policy decisions will dominate the investment landscape. With the S&P 500 now more than 90 days removed from a 2% decline—the longest such run since mid-2024—the stage is set for renewed volatility. September has historically been the market’s weakest month, averaging a 0.7% decline over the past 30 years. Four of the last five Septembers ended lower. A correction of 5–10% this fall would not be surprising and could, in fact, set the stage for a stronger year-end rally. Key drivers include: Federal Reserve policy — easing inflation may open the door to rate cuts, while strong job growth could delay them. Volatility Index (VIX) — at unusually low levels, suggesting complacency and the potential for sharper reactions to new developments. Triple witching expirations — adding short-term trading pressure this September. Despite these factors, the macro environment remains supportive. Earnings resilience, healthy economic growth, and investor confidence underpin the outlook. Elevated valuations are best understood as a reflection of optimism about future earnings, particularly in sectors leading innovation. Our perspective: We expect choppier markets in the near term, but remain constructive on equities for year-end. We continue to focus on portfolio resilience, opportunistic rebalancing, and selective positioning in areas where growth prospects justify higher valuations. For investors, discipline and perspective are essential. Volatility is not an enemy—it is an inevitable part of capital markets and often a source of opportunity. At times like these, it’s important to remember that markets move in cycles—but your goals remain constant. Our role is to help you stay focused, avoid distractions, and make thoughtful adjustments as opportunities and risks arise. As always, we welcome your questions and are here to support you. At the heart of everything we do is our commitment to Wealth Management for Life —providing enduring guidance for you and your family’s financial success.
It was a Fed-heavy week, with three major developments that matter for markets and the economy. FOMC minutes (July 29–30) — released Wednesday (Aug. 20). The minutes reinforced a data-dependent stance : participants saw continued progress on inflation but noted that risks aren’t one-way, citing pockets of labor-market cooling and the growth impact of tighter financial conditions. Policymakers emphasized flexibility and the need to see inflation moving durably toward 2% before declaring victory. For investors, the takeaway is that the bar for rapid policy shifts remains high, but the Committee is clearly keeping both sides of the mandate in view. Weekly balance sheet (H.4.1) — released Thursday (Aug. 21). The Fed’s weekly statement showed the usual moving pieces: securities holdings, reserve balances, and program usage. While week-to-week changes can be noisy, the release remains a useful pulse on system liquidity and the runoff of the Fed’s portfolio under quantitative tightening . Markets watch aggregate reserves and Treasury General Account flows because they can nudge front-end rates and funding conditions at the margin. Jackson Hole — Chair Powell’s Friday address. At the Kansas City Fed’s annual symposium, Chair Powell underscored that policy decisions will continue to be guided by incoming data . He highlighted the balance between sustaining expansion and finishing the job on inflation , noting tariff-related price pressures and supply-chain considerations among factors being monitored. The message: no preset path, but openness to adjust as evidence accumulates. Historically, Jackson Hole is more about long-term framework and risk management than near-term moves, and that tone held this year. What it means for the days ahead Near-term market drivers will be how inflation and labor data align with the Fed’s “proceed carefully” posture. • If inflation continues to edge lower while growth holds steady, the door stays open to gradual policy easing later this year. • If price pressures re-accelerate—or if hiring slows more sharply than expected—the Fed may extend its wait-and-see approach. Liquidity dynamics from the Fed’s balance sheet runoff will remain a background factor , but the central story is still inflation’s glide path and the durability of demand . Investors should expect choppy trading around key data releases , with markets pricing probabilities rather than certainties. As always, we welcome your questions and are here to support you . At the heart of everything we do is our commitment to “ Wealth Management for Life ”—providing enduring guidance for you and your family’s financial success.