Charitable Giving Strategies for High Net Worth Donors

Key Takeaways

•     Writing a check to a charity is rarely the most tax-efficient approach for high-net-worth donors. The structure of a gift, the type of asset donated, and the timing relative to income events can significantly affect both the after-tax cost of giving and the total benefit received by the charitable organization.
•     Donating appreciated securities held longer than one year generally allows the donor to deduct the fair market value of the securities while avoiding capital gains tax on the embedded appreciation. This is one of the most consistently efficient giving structures available to investors with low-basis holdings.
•     Donor-advised funds, qualified charitable distributions, charitable remainder trusts, and private foundations each serve different goals and carry different tradeoffs. Understanding which vehicle best fits a particular donor’s situation requires analysis of income levels, estate-planning objectives, and philanthropic intent.
•     Bottom line: Tax-efficient charitable giving is a planning discipline, not a transaction. Donors who approach it that way give more, keep more, and create more impact than those who don’t.

Generous instincts and good tax planning are not in conflict. For high-net-worth donors, structuring charitable gifts thoughtfully is not about gaming the system. It is about ensuring that more of the intended dollars reach the charitable organizations, and fewer go to taxes on transactions that could have been structured differently. The landscape for charitable giving changed meaningfully with recent tax legislation, and the planning considerations that were important before have become more nuanced.

This article describes the major charitable giving vehicles and strategies relevant to high-net-worth individuals. The appropriate fit for any specific situation depends on individual tax circumstances, estate planning goals, and philanthropic priorities, all of which require review with qualified tax and financial advisors.

Donating Appreciated Securities

For investors with significant unrealized capital gains in their portfolios, donating appreciated securities directly to a public charity is one of the most efficient charitable giving structures available. The donor generally receives a fair market value deduction for the donated securities (subject to the applicable AGI limitations discussed below), and the embedded capital gain passes to the charity tax-free. The charity sells the securities and retains the full proceeds.

Contrast this with the alternative: selling the securities first, paying capital gains tax on the appreciation, and donating the after-tax cash. The result is a smaller deduction, the same charitable impact, and a tax bill that reduces the effective value of the transfer. For donors holding low-basis positions accumulated over many years, the difference can be substantial.

This approach works with publicly traded stocks, mutual funds, and exchange-traded funds. Gifts of closely held business interests or real estate can also qualify but require qualified appraisals and additional planning, given the complexity involved.

Donor Advised Funds

A donor-advised fund (DAF) is an account held at a sponsoring organization (typically a community foundation, a financial institution, or a national DAF provider) to which donors contribute assets, receive an immediate charitable deduction, and then recommend grants to qualified public charities over time.

DAFs are particularly useful for donors who want to accelerate their charitable deduction into a high-income year while retaining flexibility over which organizations ultimately receive the grants. A donor who expects a large income event (a business sale, a concentrated equity award, a significant capital gains year) can contribute a large amount to a DAF in that same tax year, take the deduction immediately, and then make grants over the following years.

DAFs also accept contributions of appreciated securities, further compounding the tax efficiency. The donor contributes low-basis shares, receives a fair market value deduction, and the DAF sells the shares without recognizing taxable gain. The entire gross amount is then available for grant to charities.

Qualified Charitable Distributions

For donors who are 70½ or older and have traditional IRA accounts, qualified charitable distributions (QCDs) offer a tax-efficient giving structure that is distinct from itemized deduction planning. A QCD allows an IRA owner to direct a distribution from the IRA to a qualified public charity, up to the maximum annual exclusion for qualified charitable distributions for the year of distribution (for example, $105,000 per taxpayer for 2024 and $108,000 for 2025), as periodically adjusted for inflation and announced by the IRS. The distribution is excluded from gross income rather than treated as income offset by a charitable deduction.

This matters because excluding the distribution from income is generally more valuable than receiving an equivalent deduction. The exclusion reduces adjusted gross income (AGI), which can have cascading benefits, including reduction of Medicare premium surcharges (IRMAA), reduced taxation of Social Security benefits, and better positioning relative to AGI-based deduction limitations.

QCDs can also be used to satisfy required minimum distributions, making them a planning tool that addresses multiple objectives simultaneously. DAFs and private foundations do not qualify as recipients of QCDs.

Charitable Remainder Trusts

A charitable remainder trust (CRT) is an irrevocable trust into which a donor contributes assets, receives an income stream (either a fixed annuity or a percentage of trust assets annually) for a period of years or for life, and upon termination of the income interest, the remaining trust assets pass to one or more designated charitable beneficiaries.

CRTs are most effective when a donor has a large low-basis asset, wants income from it, and has philanthropic objectives. The trust can sell the asset without immediate recognition of capital gain, reinvest the full proceeds, and then distribute income to the donor over time. The donor receives a partial charitable deduction at the time of the contribution based on the present value of the remainder interest.

CRTs involve significant complexity and are not appropriate in every situation. The income payout rate, the trust term, and the characterization of distributed income all require careful analysis. They are also irrevocable, which means the decision to establish one deserves thorough planning.

The OBBBA’s Impact on Charitable Deductions

The One Big Beautiful Bill Act (OBBBA), signed in 2025, made several changes that affect charitable deduction planning for high earners and non-itemizers alike.

Starting in 2026, taxpayers who itemize can deduct charitable contributions only if they exceed 0.5% of their adjusted gross income. For most high-net-worth donors, this floor will not significantly reduce total deductions given the scale of their giving, but it is a change worth noting in planning discussions.

The 60% of AGI limitation for cash contributions to public charities has been made permanent, providing planning certainty for donors who contribute large cash amounts. And beginning in 2026, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) in cash donations, a new provision that does not affect most high-net-worth donors but expands the incentive landscape broadly.

Private Foundations

For donors interested in significant ongoing philanthropic activity, formal grantmaking programs, or family involvement in philanthropy across generations, a private foundation offers a structure with substantial control and flexibility. Contributions to a private foundation generate a charitable deduction (subject to lower AGI limitations than public charities), and the foundation makes grants over time, subject to the mandatory distribution requirements discussed in other resources in this series.

Private foundations involve meaningful administrative overhead, regulatory compliance (including Form 990-PF filing), and ongoing governance obligations. They are generally appropriate for donors with philanthropic commitments substantial enough to justify the infrastructure, and for families who want to formalize a multi-generational giving program.

The Wiss Wealth Management and Tax Advisory teams work with high-net-worth donors on integrating charitable giving into their broader financial and estate planning. Donors evaluating which structures fit their goals and circumstances are welcome to reach out to the Wiss Family Office team.