Charitable Giving Strategies That Make a Lasting Impact

Updated: Apr 12

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ESTATE PLANNING ESSENTIALS

Most people approach estate planning with one question in mind: how can I make sure the people I love are taken care of when I’m gone? But for many families, there’s a second goal that’s just as meaningful—how can I leave behind something that reflects the causes, values, and communities I care most about?

Charitable giving in estate planning isn’t just for the ultra-wealthy or philanthropists with buildings named after them. With the right tools and strategies, anyone can make a lasting impact while also enjoying real financial benefits along the way. In fact, charitable gifts can reduce income taxes during your lifetime, lower estate taxes after your death, and, if structured properly, provide you with steady income while you’re alive.

If you’ve ever thought about donating to charity as part of your long-term plan—but weren’t sure how to get started or whether it would make a difference—this post is for you. We’ll walk through several powerful options that can help you make a meaningful impact while also being smart about your tax situation.

This post starts with a few of the simpler strategies that almost anyone can use, then works up to some of the more advanced tools available to families who want to build a giving legacy that lasts for generations.

Direct Gifts: The Most Straightforward Way to Give

The simplest and most common way to support a charitable cause is to give money directly. Whether you’re writing a check, donating online, or dropping off a contribution at a local fundraiser, a cash gift is as easy as it gets.

From a tax standpoint, direct donations can reduce your income tax bill, provided you itemize your deductions on your tax return. The IRS generally allows you to deduct up to 60% of your adjusted gross income for gifts made to qualified public charities. If you give more than that, the excess can often be carried forward and deducted over the next five years.

While direct giving doesn’t offer the long-term planning features of some other strategies, it’s still one of the most common—and in many cases, the best—ways to support a charitable cause. Its simplicity is a big part of its appeal. You don’t need to create a new account, establish a trust, or file extra paperwork to make a meaningful impact. For many families, this kind of giving fits naturally into their everyday lives. Whether it’s writing a check to a food bank, contributing to your church or synagogue, supporting a friend’s fundraiser, or donating online after a natural disaster, direct giving lets you respond quickly and generously when the need arises.

It’s also a great fit if you don’t have large amounts of wealth to move around but still want to give in a way that’s heartfelt and helpful. And if you itemize your deductions, you’ll likely get a tax benefit for those gifts—without having to jump through hoops to make it happen. In short, direct giving works well for people who want to keep things simple, support causes they believe in, and see the results of their generosity right away.

Appreciated Securities: Turning Gains into Good

If you’ve owned stocks, mutual funds, or other investments that have gone up in value, you may be sitting on a powerful giving opportunity. Instead of selling those assets and donating the proceeds, consider donating the assets themselves.

When you give appreciated securities directly to a qualified charity, you generally avoid paying capital gains tax on the increase in value. Plus, you may be able to deduct the full fair market value of the donation on your income taxes. It’s a win-win: the charity receives the full, pre-tax value of the asset, and you receive an income tax break.

If you’ve owned stocks, mutual funds, or other investments that have increased in value over time, you may be holding a charitable gift with extra power behind it. Instead of selling those assets and donating the proceeds—which would typically trigger capital gains taxes—you can donate the securities themselves and pass the full value of the asset on to the charity, tax-free. Even better, you may be eligible to deduct the fair market value of the donation from your income taxes, giving you a double benefit.

This strategy is especially helpful for people who’ve held investments for many years or have stock from a company they’ve worked for. But it’s not just for major gifts or corporate shareholders. Some people use appreciated securities as a way to pay their annual tithing or fulfill recurring giving commitments. Instead of writing a check each month, they transfer a portion of appreciated stock at year’s end—getting the full tax benefit while preserving their cash flow.

It’s also a great fit for retirees who’ve downsized their lifestyle and no longer need the same investment income but still want to support causes they care about. In all these cases, the strategy lets people give generously, avoid unnecessary taxes, and make the most of the resources they’ve built over time.

Charitable Gift Annuities: Giving That Gives Back

For people who want to support a charitable cause but are also looking for reliable retirement income, a charitable gift annuity can offer the best of both worlds. Here’s how it works: you donate money or assets to a charity, and in return, the charity agrees to pay you (or you and a spouse) a fixed amount of income for life. When you pass away, the remainder of the gift goes to support the charity’s mission.

This strategy comes with several tax perks. You get an income tax deduction in the year you make the gift. If you donate appreciated assets, you can also reduce or eliminate capital gains tax exposure.

Charitable gift annuities are best suited for people who are charitable-minded but also value stability and financial predictability. It’s not quite the same as a traditional investment, but for the right donor, it can provide both personal peace of mind and long-term support for a favorite cause.

Donor-Advised Funds: A Flexible Giving Account

A donor-advised fund, or DAF, is often described as a charitable savings account—but in practice, it works more like a long-term giving toolkit. Here’s how it typically works: First, you open an account with a sponsoring organization, like a community foundation or the charitable arm of an investment firm. Then, you make a contribution—cash, appreciated stock, or other assets—which qualifies for an immediate tax deduction, just like a donation to any other charity.

But instead of deciding right away where that money should go, you hold it in the account until you’re ready. Over time, you “advise” the fund to send grants to the charities of your choice—whether that’s a local animal shelter, your church, a medical research nonprofit, or all of the above. Meanwhile, the money in your donor-advised fund can be invested and potentially grow, giving you even more to give away down the road.

Another reason donor-advised funds are so popular is the ability to pass the torch. Many families use DAFs not just for their own giving during life, but as a way to involve their children or other loved ones in charitable decisions after they’re gone. A trust, for example, can name a donor-advised fund as a beneficiary, with instructions that the children—or even grandchildren—serve as the advisors on how those funds are distributed. That means the next generation doesn’t just inherit money—they inherit a mission. For parents who want their legacy to reflect more than just dollars, but values and purpose too, a DAF offers a simple but meaningful way to carry that vision forward.

And because the sponsoring organization handles all the paperwork, tracking, and compliance, there’s almost no administrative burden. You can think of it almost like running your own mini charitable foundation, without the administrative burden that might make a smaller gift impractical.

Life Insurance: A Legacy Bigger Than You Think

Most people think of life insurance as something you leave to your family—but it can also be an easy and powerful way to make a large charitable gift. One approach is to name a charity as the beneficiary of an existing policy. Alternatively, you can take out a new policy specifically for charitable purposes and name the charity as both the owner and the beneficiary.

When done properly, premiums you pay on that policy may be tax-deductible, and the death benefit won’t be subject to estate taxes when it’s paid to the charity. This can be a smart option for people who want to make a sizable impact but can’t afford to write a big check today.

It’s also a helpful tool if you’ve already met your family’s financial needs and want to carve out a specific gift for an organization you believe in. Best of all, it’s straightforward to set up—your insurance agent and your estate planning attorney can usually handle the details in just a few steps.

Starting Your Own Charitable Foundation: Leaving a Legacy of Giving

For those who want to take their charitable giving to the next level—and potentially create something that lasts beyond their own lifetime—starting a charitable foundation can be incredibly rewarding.

There are two main paths here: starting a private foundation or creating a public charity.

A private foundation is usually funded and controlled by a single family, individual, or business. You maintain control over how the money is invested and distributed, and you can employ family members or advisors to help manage the foundation’s affairs. It does come with a higher level of complexity: private foundations must follow specific rules, file annual tax returns, and generally distribute at least 5% of their assets each year to charitable causes.

A public charity, on the other hand, typically receives donations from multiple sources and is overseen by a board of directors. While public charities are more flexible from a tax perspective (and donors often get a higher deduction limit), they’re usually structured for broader community involvement and must meet certain tests to maintain their public status.

Setting up either type of entity requires legal and financial guidance. You’ll need to establish a nonprofit corporation, file for 501(c)(3) tax-exempt status with the IRS, and create a governance structure that complies with state and federal law. The startup costs can range from a few thousand dollars for a public charity to significantly more for a larger private foundation.

Still, for families who want to give back in a structured, ongoing way—and perhaps involve future generations in charitable leadership—it’s a meaningful and lasting way to do good in the world.

Charitable Remainder Trusts: A Strategic Way to Sell and Give

For those preparing to sell a highly appreciated asset—like a family business, investment real estate, or long-held stock—a charitable remainder trust (CRT) can be a remarkably effective strategy. It allows you to turn a potential tax liability into a stream of reliable income, while also making a meaningful gift to a charitable cause of your choice.

Here’s how it works: instead of selling the asset directly, you contribute it to a charitable remainder trust. The trust then sells the asset, but because it’s a tax-exempt entity, there’s no immediate capital gains tax on the sale. That means the full proceeds stay in the trust, where they can be reinvested. You or another chosen beneficiary receive a steady stream of income for a set number of years or for life, and at the end of that term, whatever is left goes to the charity or charities you’ve selected.

This structure can offer extraordinary benefits. Take, for example, a business owner with $2 million in gain from the upcoming sale of their company. Selling outright could result in a large chunk going to taxes. But by selling through a CRT, those funds remain intact to generate retirement income—and the owner can support a cause they care deeply about, all in one elegant move.

While the tax advantages are powerful, they’re only part of the story. What really sets CRTs apart is the flexibility and control they provide. You can choose how the trust pays income—annually, quarterly, monthly—and whether it’s fixed or variable. You can also tailor the charitable component to fit your unique values, whether that’s education, faith, medical research, or community development.

It’s also worth knowing that CRTs do involve some planning and ongoing administration. The trust will need to be drafted by an attorney, and annual tax filings and investment oversight are part of the long-term picture. That’s why CRTs tend to be most valuable in situations involving highly appreciated assets and charitable intent—especially for families looking to create stability in retirement while giving back in a significant way.

For those who want to sell wisely, give generously, and build a personal legacy that extends beyond financial return, a charitable remainder trust can offer a compelling, purpose-driven solution. With the right team in place, this strategy can help you turn a moment of transition—like selling a business—into something that supports both your family and the greater good.

Wealth Replacement Trusts: Giving Without Taking Away

One of the most common concerns people have about making a large charitable gift is this: what about my kids? What happens to their inheritance if I give too much away?

A wealth replacement trust is designed to answer that question. It’s not a standalone giving tool, but rather a companion strategy—paired with something like a charitable remainder trust—to help preserve family wealth while still accomplishing your charitable goals.

Here’s the basic idea: when you make a significant charitable gift, you receive income and tax benefits, but you also reduce the amount that would otherwise go to your heirs. A wealth replacement trust fills that gap by using the income from your charitable remainder trust to purchase a life insurance policy held inside an irrevocable life insurance trust (ILIT). The policy is designed to pay out to your heirs after your death, effectively replacing the value of what was given to charity.

Because the ILIT owns the policy, the life insurance proceeds are not subject to estate taxes. That means your children or other beneficiaries receive a tax-free inheritance—even though a large portion of your estate was used to support a charitable cause.

This strategy is ideal for families who are philanthropic but also want to maintain a sense of financial balance. It allows you to make a meaningful charitable gift, enjoy income and tax advantages now, and still leave behind a legacy for your loved ones. It’s particularly appealing to business owners, real estate investors, or others who want to maximize the impact of each piece.

It’s also a great solution for couples who are “asset rich but cash conscious.” The charitable trust provides income, the insurance provides inheritance, and the plan as a whole provides peace of mind—knowing that you can give generously without unintentionally disinheriting the next generation.

How to Choose the Right Strategy for You

There’s no one-size-fits-all answer when it comes to charitable giving. The right approach depends on your goals, your assets, and how involved you want to be. Some strategies are simple and fast; others require more planning but offer greater long-term impact.

Here’s a quick way to think about it. If you want to give easily and see the results right away, direct giving or donor-advised funds might be your best bet. If you’re looking for income during retirement or trying to reduce taxes on appreciated assets, consider charitable gift annuities or donations of stock. And if your goal is to create a long-term giving legacy that involves your family and continues beyond your lifetime, a foundation might be the path for you.

What’s important is that your giving matches your values—and that it works within your broader estate plan. A good estate planning attorney can help you weigh your options, look at the tax consequences, and create a plan that honors both your financial goals and your heart.

Final Thoughts: Giving as a Reflection of What Matters Most

Charitable giving isn’t just a financial decision—it’s a reflection of what matters most to you. It’s a chance to turn your success into someone else’s opportunity. And with a thoughtful estate plan, your generosity can echo far beyond your lifetime.

Whether you want to support your church, your community, or a cause that changed your life, the tools are out there to make it happen. And with the right strategy, you can maximize your impact, reduce your tax burden, and leave behind a legacy of kindness, compassion, and purpose.

If you’re ready to explore charitable giving as part of your estate plan, don’t go it alone. Let’s work together to create something that reflects both your financial goals and your deepest values.

By Justin J. Wall, Esq.

Trusts & Estates Attorney

Utah and Arizona