Most donors focus on the amount they give to charity, but how they choose to give is where is an important decision. Depending on the strategy, charitable giving can be structured to potentially reduce taxes, avoid unnecessary costs, and efficiently plan the timing of charitable contributions and grants in future years.
What are the different ways to make a large donation to charity?
Below is a side-by-side comparison to help you better understand the different approaches to charitable giving.
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Category
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Donor-Advised Fund (DAF)
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Appreciated Stock (Direct Gift)
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Cash Donation
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What is it?
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A charitable investment account - you contribute assets now, get a deduction (if eligible), and grant to charities over time
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Transfer of long-term appreciated securities directly to a charity
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Simple donation of cash (check, ACH, credit card)
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Tax Deduction Timing (if eligible)
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Immediate tax deduction when you contribute to the DAF, but you can advise grants to charities later.
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Immediate tax deduction when giving, and the charity receives the donation immediately as well.
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Deduction in the year cash is given.
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Deduction Amount
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Fair market value (FMV) of contributed assets
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Fair market value (FMV) for long-term holdings
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Dollar-for-dollar amount donated
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AGI Limits (Adjusted Gross Income)
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Typically up to 60% (cash) / 30% (securities)
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Typically up to 30% of AGI
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Up to 60% of AGI
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Capital Gains Tax Treatment
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Appreciated assets contributed to a DAF are generally not subject to capital gains tax at the time of contribution
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Donated shares of appreciated stock to a DAF are generally not subject to capital gains tax at the time of contribution
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Not applicable (no asset sale)
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Ease of Giving
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Easy one-time set-up; centralized platform for multiple gifts
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Moderate; requires transfer instructions for each charity
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Very easy
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Timing Flexibility
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High; separate tax event (at time of contribution) from charitable decision (granting)
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Low; gift and charity selection happen simultaneously
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Low; gift and charity selection happen simultaneously
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Administrative Burden
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Front-loaded setup administrative fees; minimal ongoing effort
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Requires coordination with Advisor team + charity each time. No addtl; fees to make donation
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Minimal
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Minimums
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Often requires minimum to open (e.g., $5k-$25k depending on sponsor)
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No formal minimum; depends on holdings
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None
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Investment Growth
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Assets can be invested and grow tax-free before being granted
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None; assets leave your portfolio immediately
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None
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Ideal Use Case
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"Bunching" deductions, high-income years, long-term giving strategy
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Donating highly appreciated positions efficiently
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Simple, small, or recurring gifts
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There’s no one-size-fits-all approach to charitable giving.
The right strategy depends on factors like income timing, the types of assets you hold, and how involved you want to be in managing your donations.
For those seeking flexibility and long-term planning, a Donor-Advised Fund can be a powerful tool. If you’re sitting on highly appreciated investments, donating stock directly may offer the greatest tax efficiency. Cash can still play an important role for simple and immediate giving.
At Blue Chip Partners, we help design a thoughtful giving strategy that doesn’t just support the causes you care about but is part of your holistic financial plan. Taking the time to align your charitable approach with your broader goals can make your generosity go even further. Want to discuss your giving strategy? Reach out to an advisor today.
Disclaimer: Individual views and opinions expressed in the podcast, article, or other media included herein may not necessarily reflect the views and opinions of Blue Chip Partners, LLC. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for individualized financial, tax, legal or accounting advice. You should consult your own professional financial, tax, legal, accounting, or equivalent professional prior to making any investment decision. All investments involve a degree of risk, including the risk of loss. Past performance is not indicative of future results.
