Charitable Planning Complete Guide

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

Vehicle comparison at a glance

• DAF (Donor-Advised Fund): immediate tax deduction, no required distribution, low admin (0.6% typical), anonymous giving possible. 60% AGI deduction limit for cash, 30% for appreciated assets to DAFs.¹ Best for: $50K-$5M charitable capital.
• Private Foundation: full control, family engagement, 5% minimum annual distribution (IRC § 4942), 990-PF public disclosure, higher admin.² 30% AGI deduction limit for cash, 20% for appreciated assets. Best for: $3M+ corpus, multi-generational family giving.
• Charitable Remainder Trust (CRT): income to you/spouse for life or term, remainder to charity. Irrevocable. Immediate partial income-tax deduction (PV of remainder interest) + capital gains deferral inside trust.³ Best for: large appreciated assets.
• Qualified Charitable Distribution (QCD): direct IRA → charity. 2026 limit: $111,000 per person (indexed).⁴ Counts toward RMD, excluded from AGI. Best for: RMD-age retirees who want AGI-reducing giving.

Appreciated stock vs cash gifts

• Gifting appreciated stock held >1 year: deduct fair market value + avoid capital gains tax on appreciation.
• Example: $100K of stock with $20K basis. Cash gift = $100K deduction. Stock gift = $100K deduction + $80K gain avoidance. At 20% LTCG + 3.8% NIIT, that's $19K extra savings.
• Always gift appreciated stock first, cash last. Simple rule, frequently missed.
• Complex assets (private business interest, real estate, partnership stakes) need appraisal + advance planning. DAFs and foundations accept these; most public charities struggle.

Bunching strategy post-TCJA

• Standard deduction ($16,100 single / $32,200 MFJ in 2026, per IRS Rev. Proc. 2025-32) means many moderate donors no longer itemize — losing charitable deduction benefit in non-bunching years.⁵
• Bunching: concentrate 2-5 years of giving into one year via DAF contribution. Itemize that year; take standard deduction in intervening years. Charities still get funded over time from the DAF.
• Effective charitable benefit preserved; tax benefit restored.
• Popular pattern: $50-100K DAF contribution every 3 years for donors giving $15-30K/year.

Charitable Remainder Trust (CRT) mechanics

• Irrevocable trust governed by IRC § 664. Donor contributes appreciated asset → trust sells tax-free inside trust → trust pays donor income for life or term up to 20 years → remainder (at least 10% of initial FMV) passes to named charity.³
• CRUT (Unitrust): pays a fixed percentage of trust's annually-revalued assets. Flexible with market; payments rise or fall with portfolio.
• CRAT (Annuity): pays fixed dollar amount set at inception. Simpler but doesn't adjust for inflation; front-loaded low-return risk can trigger § 7520 failure.
• Typical use case: $2M+ of highly-appreciated stock you want to diversify without $400K+ capital gains tax bill.
• Required payout: 5%-50% annually. Remainder interest must be at least 10% of contribution (10% minimum charitable benefit test).³ Reported annually on Form 5227.

Qualified Charitable Distribution (QCD)

• For IRA owners age 70½+. Direct transfer from IRA to a qualified 501(c)(3) charity under IRC § 408(d)(8).⁴
• 2026 limit: $111,000 per person (up from $108,000 in 2025; indexed for inflation per SECURE 2.0). Married couples filing jointly: up to $222,000 combined.
• QCD counts toward RMD but is excluded from AGI. Reduces taxable SS portion, IRMAA tier risk, NIIT exposure.
• One-time split-interest QCD (SECURE 2.0): up to $55,000 (2026) to a CRT or Charitable Gift Annuity — once per lifetime.
• Must be direct trustee-to-charity transfer. If check comes to you first, loses QCD status.

Private foundation governance

• Foundations suit families that want next-generation engagement in philanthropy.
• Common structure: parents founding board, children as board members, family gatherings around grant decisions.
• Real cost: ~$15-50K/year for small foundation (under $10M). Scales with complexity.
• Compliance: 990-PF annual filing (public record),⁶ 5% minimum distribution requirement (IRC § 4942), self-dealing prohibition (IRC § 4941), jeopardizing-investment prohibition (IRC § 4944), excess business holdings (IRC § 4943).
• Most foundations under $3M are better served by DAFs. Above $5M, foundation benefits (control, family engagement, investment flexibility) often justify costs.

Sources

1. IRC § 170 — Charitable, etc., Contributions and Gifts. AGI limits: 60% cash to public charities/DAFs, 30% appreciated to public charities/DAFs, 30% cash / 20% appreciated to private foundations.
2. IRC § 4942 — Private Foundation 5% Minimum Distribution Requirement. Related: § 4941 self-dealing, § 4943 excess business holdings, § 4944 jeopardy investments.
3. IRC § 664 — Charitable Remainder Trusts. Payout 5%-50%; remainder ≥ 10% FMV at inception; term ≤ 20 years.
4. IRC § 408(d)(8) — Qualified Charitable Distributions. 2026 limits per IRS 2026 Inflation Adjustments.
5. Tax Foundation — 2026 Standard Deduction ($16,100 single; $32,200 MFJ).
6. IRS — Private Foundations Overview. Form 990-PF annual filing and public disclosure.

Charitable deduction limits, QCD amounts, and foundation compliance rules verified against IRC and IRS 2026 publications.