5 Charitable Giving Strategies for Retirees 

Key Takeaways 

• Use RMDs strategically: Qualified charitable distributions (QCDs) let those 70½+ send IRA funds directly to charity tax-free, satisfying some or all of an RMD. 

• Donate investments, not cash: Giving appreciated stocks or funds helps you avoid capital gains tax and still qualifies for a deduction at fair market value. 

• Consider a donor-advised fund: Bundling several years of giving into one contribution can help clear the itemization threshold while letting you decide on specific charities or causes later. 

• Rethink beneficiary designations: Naming a charity as beneficiary of a tax-deferred account avoids the income tax burden that would fall on family members, freeing up more tax-friendly assets to leave to loved ones. 

• Get professional guidance: Because rules on QCDs, deduction limits, and beneficiaries can be complex and change over time, a financial or tax advisor can help tailor the right combination of strategies. 

• Explore other tools: Charitable remainder trusts, real estate gifts, and life insurance donations can offer additional tax-efficient giving options. 

Why You Need a Plan for Giving in Retirement 

Retirement often brings a desire to give back — but without a thoughtful approach for giving to charity, more of your donation can end up going to taxes than to the causes you care about. Fortunately, several strategies let retirees stretch their generosity further while managing their tax bills and retirement finances along the way. 

5 Options for Strategic Giving 

1. Turn Required Withdrawals Into Tax-Free Gifts 
   Once you reach age 73, the IRS requires you to take annual required minimum distributions (RMDs) from tax-deferred retirement accounts. Withdrawals from each retirement account are considered ordinary income and can push you into a higher tax bracket, increase taxes on Social Security benefits, or raise Medicare premiums. 
   
   Can an IRA Be Donated to Charity? 
   A qualified charitable distribution (QCD) offers a workaround. If you’re 70½ or older, you can direct funds straight from your individual retirement account (IRA) to a qualified charity. The donation can satisfy all or a portion of your RMD and isn’t reported as taxable income on your tax return. This means the charity receives the full distribution while the IRS gets nothing. 
   
   So far, so good, but you may be wondering: Can I donate an inherited IRA? What about other types of IRAs? Here are a few IRA withdrawal rules to be aware of: 

• QCDs can be made from a traditional IRA, an inherited IRA, a Savings Incentive Match Plan for Employees (SIMPLE) IRA, or a Simplified Employee Pension IRA (SEP-IRA) you’re no longer contributing to. However, it can’t come from a 401(k) or similar workplace plan. 

• The funds must go directly from your custodian to the charity; they cannot pass through your personal bank account first. 

• Annual QCD limits are adjusted periodically, so check the current-year cap with your custodian or tax advisor. 

2. Donate Appreciated Investments Instead of Cash 
   If you hold stocks, mutual funds, exchange-traded funds (ETFs), real estate, or other non-cash assets that have grown in value over more than a year, consider donating the investments directly rather than selling them and giving cash. 
   
   Selling appreciated securities triggers capital gains taxes, but donating them directly to a qualified charity avoids that tax altogether. Instead, you receive a deduction for the full fair market value of the securities (if you itemize), while the charity can sell the position without owing any capital gains tax itself. 
   
   Keep in mind that deductions for this type of gift are generally capped at a percentage of your adjusted gross income, though any excess can typically be carried forward for several years. If your favorite charity doesn’t have a brokerage account set up, a local community foundation can often help facilitate the transfer. 

3. Consider a Donor-Advised Fund 
   A donor-advised fund (DAF) allows you to make a single contribution of cash or appreciated assets and then recommend grants to charities over time. Because tax law changes raised the threshold for itemizing deductions, many retirees “bunch” several years’ worth of giving into one larger contribution to a DAF to clear that threshold in a given year. 
   
   Once inside the fund, your contribution can be invested and grow tax-free until it’s distributed to the causes you choose. Although you give up legal control of the assets, you retain advisory privileges over when and where grants are made. This flexibility makes a DAF among the most useful financial planning tools for retirees who want to lock in a tax benefit now while deciding on specific recipients later. 

4. Rethink Your Beneficiary Designations 
   Many retirees plan to leave retirement accounts to children or other loved ones, but this isn’t always the most tax-efficient choice. Non-spousal beneficiaries of traditional IRAs or 401(k)s owe ordinary income tax on withdrawals, and most are now required to empty inherited accounts within 10 years, which can push them into a higher tax bracket during their peak earning years. 
   
   By contrast, a charity named as beneficiary receives the full account value without owing income tax on the distribution. A common savvy approach is to leave tax-deferred accounts to charity and pass more tax-friendly assets, such as a Roth IRA or life insurance, to family members instead. 

5. Look Beyond Traditional Retirement Accounts 
   Charitable giving doesn’t have to center only on IRAs and brokerage accounts. Other options worth exploring with a financial or estate planning professional include: 

• Charitable remainder trusts, which can provide you with income during retirement while ultimately benefiting a charity 

• Life insurance policies, either donated outright or with a charity named as beneficiary 

Putting It Together 

The right mix of strategies depends on your income sources, account types, and overall estate plan. Many retirees find that combining approaches provides both flexibility and tax efficiency. 

For example, you can use QCDs to manage RMDs while also directing a donor-advised fund for larger gifts. 

Because the rules around QCDs, deduction limits, and beneficiary designations can be complex and change periodically, it’s worth reviewing your plans with a qualified financial advisor or tax professional. With the right structure in place, you can give generously to the causes you love while keeping more of your retirement savings working for you. 

Do Retirement Giving the Smart Way With Baltimore Community Foundation 

Since 1972, Baltimore Community Foundation (BCF) has supported a better future for our region. We are working to build a vibrant Baltimore with a growing economy, where all have the opportunity to thrive. To accomplish this, we’re helping donors to achieve their charitable goals, generation after generation, while improving the quality of life right here in Greater Baltimore through grantmaking, enlightened civic leadership, and strategic investments. 

Reach out to our team to learn more about partnerships, giving to the causes you care about, applying for a grant, and more. BCF can create safe spaces for meaningful conversations, help families articulate their goals, and advise on charitable tools that can continue to engage future generations.