You don’t have to be an accountant, tax attorney or financial planner to be a successful fundraiser. You do, however, need to understand the tax basics and other financial benefits that can result from well-planned gifts so you can help motivated donors make the most of their charitable gift dollars at year-end.
Keep in mind:
When to take the standard deduction. Every taxpayer is allowed a standard deduction that varies according to the taxpayer’s filing status. To benefit from the charitable deduction, donors must have more total itemized deductions than their standard deduction amount. Otherwise, they should simply take the standard deduction (and most taxpayers do). The recent tax legislation further increased the standard deduction amounts for 2025; for future years, the amounts will be indexed for inflation.
How to itemize charitable gifts. With a higher standard deduction available to taxpayers, donors should consider “bunching” gifts into certain years, thereby benefitting from the charitable deduction in those years. This is why some savvy donors make larger gifts every other year. Be careful when only recognizing “loyal” donors who give every year as you may miss some of your best donors with that approach.
Dealing with excess deductions. As noted above, there are limits on how much can be deducted each year for tax purposes. Cash gifts are deductible up to 60% of the donor’s adjusted gross income (AGI). Amounts in excess of this limit may be carried over for five future years. As a result, some donors making large gifts may benefit from deductions in as many as six tax years. Any amount that cannot be claimed during that time period provides no tax benefit.
Maximizing the benefits of noncash contributions. Certain noncash gifts may be deducted at their full value for income tax purposes. Popular examples include gifts of stocks, other securities and real estate that has been held for longer than a year. These gifts may be deducted up to 30% of the donor’s AGI with the same five-year carryover period as cash gifts. Special rules apply to tangible personal property such as automobiles, art and antiques, inventory gifts and other gifts that would give rise to “ordinary income” if sold.
A deeper dive
For a more in-depth look at the tax implications of charitable giving, especially in light of the new tax law, read “An Overview of 2025’s One Big Beautiful Bill Act.” ■
