Charitable Gifting: How to Align Philanthropy and Donations with Your Financial Goals

Build Giving to Causes That Are Important to You into Your Financial Planning

Philanthropy and charitable donations can be an important part of reaching your financial goals and estate planning, but how you donate can make a big difference for you and the charities you support. One option to consider: using your investment accounts for charitable donations.

The three most common types of gifting from an investment account:

• Gifting appreciated stock from a taxable account to a non-profit organization
• Establishing a Donor Advised Fund (DAF), donating appreciated stock from a taxable account, and then recommending gifts from the DAF to non-profit organizations.
• Making a Qualified Charitable Donation (QCD) of cash from your IRA, which may also satisfy your Required Minimum Distribution (RMD).

We have compiled a list of the main tips you should consider when reviewing how charitable giving can fit into your financial planning goals, as well as more details on each of the three most common types of charitable giving below.

Start thinking about gifting as early as possible. While many organizations push for donations at the end of the year, donating earlier, even September or October, can be a much smoother process. Donations made earlier in the year can ensure the proper timing of the gift and can help the receiving organization make plans for the next year.

We recommend getting in touch with your Clean Yield portfolio manager, accountant, or other financial advisor in summer or early fall to see whether gifting from your investment portfolio would be advisable.

No matter your tax situation, if you plan to gift to qualified charities or a donor-advised fund (DAF), it is worth considering the gift of appreciated stock. Giving appreciated stock (meaning stock you would have to pay capital gains tax on if you sold it) allows you to avoid realizing taxable gains, locks in that higher market value for the charity, and rebalances risk in your portfolio. In addition, if you are itemizing your tax return, you will get the deduction benefit of the current market value of that stock.

Gifting Appreciated Stock from Your Taxable Account

Taxable accounts include individual, joint, transfer on death, and various types of trust accounts. Clients must pay capital gains taxes when shares of stock are sold from a taxable account. If the stock was held for a long time, these gains can be sizeable.

Instead of selling the stock, paying the capital gains tax, and then gifting the proceeds to a charity, clients can gift the stock directly to the charity. This results in more money for the charity (full sale proceeds rather than proceeds minus tax), while the donor also gets a tax deduction for the full value.

Benefits of gifting appreciated shares:

• You don’t pay capital gains on the stocks you donate.
• Organization does not pay capital gains tax when they sell.
• Income tax deduction may be applicable.
• Can help mitigate risk in your portfolio by reducing a large position of highly appreciated stock in account, without incurring capital gains tax exposure.

Drawbacks of gifting appreciated shares:

• Non-profit needs to have a brokerage account. Most do, but some new or very small non-profits may not know how to accept.

Learn more about charitable gifting and tax considerations in this article from Charles Schwab.

Donor Advised Fund

A Donor Advised Fund, or DAF, is a separate account you establish at a financial organization, called a sponsor. You then make your donation to the DAF and request the sponsor to make contributions from that account to the charities you select. Contributing to a DAF counts as a charitable donation for most but not all IRS purposes. (Learn about the important exception, Qualified Charitable Distributions, below.)

One important caveat about DAFs rose to prominence in 2026. The DAF sponsor, the financial institution that hosts the account, is the owner of the fund and has final say over where the funds from the account are distributed. Most of the time, proof that the intended recipient is a 501(c)(3) non-profit can suffice. However, if the intended organization is new, or tiny, or controversial, the sponsor has the right to refuse to distribute money to the organization. This issue was highlighted in 2026 when the Southern Law Poverty Center, a well-known organization that tracks hate groups, was charged by a federal grand jury in Alabama on grounds that, to many, seemed politically motivated. Several DAF sponsors, including those affiliated with Fidelity, Schwab and Vanguard, chose to ban donations from their DAFs to SPLC after the indictments, despite it not being a legal requirement to do so. While this situation may be resolved in the future, it is a reminder that donors to DAF do give up some control of their funds.

Benefits of donor advised funds:

• May be simpler than making stock donations to multiple organizations.
• May help offset taxes in a year with particularly large income.
• Can be a way to bunch the donation of stock, but then give to charities over several years.

Drawbacks of donor advised funds:

• Potential that the non-profit is too small or new to be eligible.
• Additional account and fees.

Qualified Charitable Distribution (QCD)

Apologies in advance for the alphabet soup of acronyms, you’re about to read: If you have an individual retirement account (IRA), Required Minimum Distributions (RMDs) are amounts that need to be annually withdrawn from the IRA, beginning at age 73. Donations from an IRA directly to charities (not a DAF), referred to as Qualified Charitable Distributions (QCDs), can count as part or all of your RMD.

While RMDs are taxable as income, the QCD, or the donated part of your RMD, does not count toward your income that year, so a QCD can significantly reduce your taxable income. Donations to a donor-advised fund from an IRA do not count as a QCD — the amount can be reported as a charitable deduction, if applicable, but will be taxed as income.

Benefits of qualified charitable distributions:

• Can significantly reduce taxable income.
• You can make a donation directly from an IRA to a charity (not DAF) to satisfy part or all of your RMD.
• May be particularly beneficial for those who do not itemize their deductions.

Drawbacks of qualified charitable distributions:

• Cannot be made to a donor-advised fund or private foundation.
• Results in a check sent to the charity — be sure to follow up and see if the check was received.
• Certain IRA accounts are excluded, check with your Clean Yield portfolio manager, accountant, or other financial advisor.
  

We can help align your financial goals with your values, including through charitable donations. We welcome the conversation and are here to help. Contact us to get started.