Year-End Charitable Giving: Q&A with Hobbs Group Advisor Francesca Passen

Why is year-end such an important time to think about charitable giving?

• Many strategies must be completed by December 31.
• Helps maximize tax efficiency—especially for individuals with Required Minimum Distributions (RMDs) or high-income years.
• This is a great time to review goals and align giving with your financial plan.

Can you explain what a Qualified Charitable Distribution (QCD) is?

• A QCD lets people 70½ and older give directly from their IRA to charity.
• Up to ~$108,000 per year.
• Counts toward your RMD without increasing taxable income.
• Useful for managing Medicare premiums and Social Security taxation.

What common mistakes do people make with QCDs?

• Waiting until late December—custodian processing can delay.
• Taking the RMD first (you can’t retroactively convert it to a QCD).
• Sending the distribution to themselves instead of directly to the charity.
• Trying to send a QCD to a donor-advised fund—which is not allowed.

How do donor-advised funds (DAFs) fit into year-end giving?

• DAFs allow a donor to front-load giving—donate once, deduct this year, give later.
• Great for “bunching” deductions in a high-income year.
• Can donate appreciated stock to avoid capital gains.

What’s the biggest benefit of donating appreciated securities rather than cash?

• Double tax benefit:
  • Avoid capital gains tax.
  • Deduct full fair-market-value.
  • Allows you to give more without extra out-of-pocket cost.

Why is gifting highly appreciated stock such a powerful charitable giving strategy?”

• Donating appreciated stock directly to a charity allows you to avoid paying capital gains tax on the growth.
• You also receive a full fair-market-value deduction for the shares you donate if you itemize.
• This means the charity receives the full value of the asset, not a reduced amount after taxes—so your gift goes further.
  • It’s especially effective for long-term holdings with significant gains or for clients who want to rebalance a concentrated position in their portfolio.
  • Many charities and donor-advised funds can accept stock directly, making the process smoother than most people expect.

Who is the ideal candidate for a donor-advised fund?

• Someone with high income this year (bonus, business sale, stock vesting).
• Retirees who want to set aside a pool for future giving.
• Families wanting to create a structured, long-term giving plan.

How do charitable strategies influence retirement planning?

• QCDs can reduce taxable income in retirement.
• Helps manage RMDs and avoid Medicare Income-Related Monthly Adjustment Amount (IRMAA) surcharges.

Is it possible to make charitable giving more tax-efficient for younger donors who don’t itemize?

• Yes—DAFs allow donors to bunch deductions into one year.
• Donating appreciated securities is still tax-efficient even if you don’t itemize.
• Company match programs can double impact to the charitable cause.

How should people choose between giving through a QCD or through a donor-advised fund?

• QCDs are for those 70½ and older and come from an IRA—ideal for people with RMDs.
• DAFs are flexible and good for multi-year giving but cannot receive QCDs.
• Many clients use both at different life stages.

What needs to be done before December 31?

• Review your giving plan now—don’t wait.
• Confirm custodian deadlines for QCDs.
• Look at appreciated securities for gifting.
• Make sure your giving aligns with your financial goals.