Charitable Giving Surge: Maximize Year-End Donations

Charitable giving has seen a remarkable surge in recent years, with Americans donating a record-breaking $557.16 billion in 2023. As the end of the year approaches, donors are looking for effective strategies to maximize their contributions and tax benefits. This article explores the factors contributing to the increase in charitable giving and provides practical tips for donors to make the most of their year-end donations.

The resurgence in charitable giving can be attributed to several factors. The CARES Act, enacted in response to the COVID-19 pandemic, allowed donors to deduct up to $300 in charitable contributions from their tax returns, even if they didn't itemize, encouraging more people to give. Additionally, the stock market's resilience and strong corporate earnings have led to an increase in wealth, enabling donors to be more generous. Giving by foundations has also grown significantly, with contributions estimated at $103.5 billion in 2023, nearly 180% higher than in 2016.



Different donor segments have contributed to this trend. Individuals remain the backbone of American charity, accounting for 67% of all giving, with a 1.6% increase in 2023. Foundations played a significant role, contributing 19% of charitable giving, with a 1.7% increase. Corporate giving grew by 3%, while bequests increased by 4.8%.

To maximize tax benefits when donating by the end of the year, consider the following strategies:

1. Donate Appreciated Assets: Donating long-term appreciated stocks, bonds, or mutual funds directly to charity allows you to avoid capital gains tax and claim a tax deduction for the full fair market value. This strategy is particularly beneficial if you've held the assets for more than a year.
2. Use a Donor-Advised Fund: These funds enable you to make tax-deductible contributions in one tax year and recommend grants to charities over time. This approach offers flexibility and allows you to spread out donations while maximizing immediate tax benefits.
3. Bunch Contributions: If your planned donations for the next few years exceed the standard deduction, consider bunching multiple years' worth of contributions into a single tax year. This strategy can increase total tax deductions and maximize benefits over time. A donor-advised fund can facilitate this process.
4. Review Previous Giving: Evaluate your charitable giving over the past 12 months to identify inspiring causes and optimize your giving strategy for the coming year.
5. Utilize State Tax Credits and Workplace Matching Programs: Many states offer tax credits for charitable donations, and companies often match employee contributions. Be sure to take advantage of these opportunities to maximize your tax benefits.
6. Sell Depreciated Securities: Selling depreciated securities and donating the cash proceeds can generate tax advantages, such as capital loss deductions and income tax deductions from the donation.
7. Set a Giving Goal: Establishing a giving goal for the following year can help you proactively integrate charitable giving into your financial plan and create a more fulfilling giving experience.



In conclusion, the surge in charitable giving presents an opportunity for donors to maximize their contributions and tax benefits by the end of the year. By employing strategic giving techniques and taking advantage of available tax incentives, donors can enhance their charitable impact while optimizing their financial situation. As the end of the year approaches, consider these strategies to make the most of your charitable giving.