A key aspect of planning is finding ways to be as efficient as possible with your money and one great example of that is charitable giving. It’s something that many people care a lot about and if we can help them do that with more efficiency, it’s a win-win for everyone. That’s why this episode of the Money Wisdom podcast with Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® is all about donor advised funds and qualified charitable distributions (QCDs). These financial tools are gaining attention for their ability to offer significant tax benefits while enhancing charitable giving and we’ll break down what you need to know.

Donor-advised funds are an excellent option for those looking to contribute to charity with flexibility and control. They allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. This is particularly beneficial for individuals who experience a large taxable event, such as the sale of a business or stock. By placing a lump sum into a donor-advised fund, donors can lock in a charitable deduction for the year while planning future donations to their chosen charities.

One strategic use for these donor-advised funds is for appreciated stock. By donating stock directly to a donor advised fund, individuals can avoid capital gains taxes, allowing the charity to benefit from the full value of the stock. This approach maximizes the impact of the donation, ensuring that more funds reach the intended charitable organizations.

But donor-advised funds aren’t the only planning strategy for those who want to give their money to organizations they care about. Another option we get asked about a lot is the qualified charitable distribution (QCD), a powerful tool for retirees. QCDs allow individuals aged 70½ or older to transfer up to $100,000 annually from their IRAs directly to a charity. This transfer can satisfy required minimum distributions (RMDs) without incurring taxable income, making it an efficient way to support charitable causes while reducing tax liabilities.

Either of these strategies should be worked into a comprehensive financial plan so have discussions with your financial advisors to explore opportunities for tax-efficient charitable giving. By leveraging donor-advised funds and QCDs, individuals can leave a lasting legacy, benefiting both their loved ones and the charities they support.

Here’s what we discuss in this episode:

0:00 – Intro and question

0:42 – Defining donor-advised funds

2:00 – When would you use this?

6:09 – Numbers to address

Join us for our next financial workshop to learn about these strategies and more. Text WORKSHOP to 800-757-0436 to reserve your spot today.