As year-end approaches, many families find themselves balancing tax optimization and their philanthropic impact. We believe that these year-end goals, rather than compete, can work together to strengthen both your financial picture and the causes you care about most.
Our interdisciplinary team of tax experts, estate planners, and philanthropic specialists, supports families navigating charitable gifting and tax efficiency. Here’s what we’ve learned about making strategic philanthropic decisions that align with a Life-Minded Wealth® approach.
Donor-Advised Funds: A Flexible Giving Tool
A donor-advised fund (DAF) can be one of the most versatile gifting vehicles, providing families with a solution that includes immediate tax benefits while maintaining thoughtful decision-making beyond the end of the year.
A DAF is often valuable for families with high income or those who prefer to manage tax planning separately from their philanthropic strategy.
Benefits include:
- Immediate tax deduction for the current tax year when you fund a DAF by December 31st
- Flexible granting timeline that allows you to recommend charitable distributions on your schedule
- Tax-free growth potential with reinvestment opportunities
- “Bunching” strategy that amplifies your income tax deduction during high-income years
The Benefits of Giving in Appreciated Securities
Donating securities, instead of cash, can increase philanthropic impact while reducing tax liability for clients holding significantly appreciated positions in their taxable accounts.
Let’s look at an example of the taxation on a $25,000 charitable gift, and the differences between making a cash donation and an appreciated securities donation. Assume that the individual is a high-income earner that itemizes their deductions, and the donated appreciated security is considered a long-term holding.
Example: $25,000 Charitable Gift
Assumptions:
- Fair Market Value (FMV) = $25,000
- Cost Basis = $9,000
- Long-term capital gains tax rate = 20%
- Donor’s tax bracket = 37%
| Donate Appreciated Securities to a DAF or Charity | Sell Securities and Donate Cash Proceeds to Charity | |
| Capital Gains Recognized | $0 | $16,000 |
| Capital Gains Tax (20%) | $0 | $3,200 |
| Charitable Deduction | $25,000 (FMV) | $25,000 |
| Net Impact to Donor | Avoids $3,200 incapital gains tax | Pay $3,200 incapital gains tax |
Pro Tip from Our Wescott Advisory Team: If donating securities creates an underweight position in your portfolio, consider using cash to repurchase the position. This strategy maintains your desired investment exposure while resetting your cost basis with newly purchased shares.
Consider Charitable Remainder Trusts for Income and Giving Back
Charitable remainder trusts (CRTs) offer one approach for families seeking retirement income while supporting philanthropic causes and achieving significant tax benefits.
A CRT can offer an immediate partial income tax deduction on charitable contributions, help avoid capital gains taxes on donated assets, and reduce the size of your taxable estate, potentially decreasing your estate taxes.
Here’s how they work:
- Transfer your appreciated securities into a tax-exempt trust
- The trust sells positions without tax implications to you as the donor
- Proceeds are reinvested in a diversified portfolio strategy
- You receive regular payments for life or a fixed term
- The remaining assets are given to your chosen charities
Amplifying Your Community Impact
As a Certified B Corporation, we understand the importance of creating positive social and environmental outcomes. We encourage clients to consider giving approaches that align with their personal values and community needs. These approaches embody our Life-Minded Wealth® philosophy by aligning your philanthropic activities with your financial capacity, personal mission, and community connection:
- Partner with community foundations that identify and respond to local needs
- Support people and organizations driving innovation and inclusion
- Collaborate on initiatives to amplify personal and collective impact
- Volunteer for causes you care about and create meaningful connections
We are committed to positively impacting the communities where we live and work by dedicating resources to supporting regional and national charities, philanthropic organizations, educational institutions, and civic groups.
New Tax Considerations and Year-End Deadlines to Remember
Because of recent legislative changes in the One Big Beautiful Bill Act (OBBBA), charitable deduction rules are changing. Starting in 2026, taxpayers can only deduct charitable contributions exceeding 0.5% of their adjusted gross income. Additionally, those in the highest tax bracket (37%) will only be allowed to itemize deductions up to 35% of their income.
In addition to these changes, you should keep top of mind that December 31st is the deadline for virtually all charitable giving strategies if you want to claim the deduction in the current tax year. While most donations must be completed by year-end, mailed checks should be postmarked by December 31st (not received), and securities transfers must be received by your chosen charity or DAF before midnight on New Year’s Eve.
A Timing Consideration: Each custodian has different processing requirements for securities transfers, which can vary by investment type. We recommend initiating your securities-based charitable gifts before mid-December to ensure your transactions are executed before year-end.
A Comprehensive Approach to Charitable Planning
While much synchronization goes into structuring gifts for maximum tax efficiency and coordinating major gift timing, we understand how giving impacts families on a much deeper level.
Our team of planning experts supports clients with their charitable gifting strategies across several key areas:
- Family dynamics consultants – Facilitate healthy conversations about values
- Philanthropic specialists – Help explore motivations and clarify impact goals
- Estate planning attorneys – Ensure charitable strategies align with broader legacy plans
The intersection of tax strategy and philanthropic impact can be a strategic opportunity to advance your financial objectives and the causes you care about most. With a tailored approach, your charitable gifting can become a cornerstone of your Life-Minded Wealth® strategy now and into the future.
Create Your Personalized Charitable Strategy Today
Whether you are looking to optimize a single year-end gift, or create a comprehensive multi-generational giving strategy, there is no time like the present. The approaching tax law changes make 2025 a pivotal year for charitable planning. With new limitations on the horizon, families have a window of opportunity to maximize their gifting strategies under today’s current, less constrictive rules.
Charitable planning often works best when it aligns with your holistic goals. This is why we focus gifting around your Life-Minded Wealth® approach to maintain continuity between your philanthropic strategy, investment plan, estate objectives, and values.
The most successful philanthropic strategies develop over time, allowing your charitable gifting to evolve alongside your life circumstances, and deepen your impact for future generations.
To begin creating your personalized charitable strategy that reflects your values and goals, speak with our Wescott team of experts today.
