Whether it’s a contribution of time or capital, there are few things as gratifying as an act of charitable giving.

It’s a message that’s clearly catching on: Americans give away over $500 billion per year to charitable organizations. What’s more, the largest source of that charitable giving (about two thirds) comes from individuals.¹

Why give?

There are countless reasons to give, and the benefits range from the emotional to the physical to the fiscal.

• Happiness. A study by Harvard Business School found that giving money to someone else lifted the giver's happiness more than spending that money on themselves. (This, despite the givers' expectation that spending on themselves would make them happier.)²
• Health. There’s been a wide range of research linking generosity to better health, even in people with chronic illnesses. Researchers suggest one reason giving may improve physical health is that it helps decrease stress.
• Social connection. Several studies have suggested that when you give to others, your generosity will likely be rewarded down the line – whether by the person you gave to or someone else. These exchanges promote a sense of trust and cooperation that strengthens our ties to others.

But in addition to these emotional and physical reasons for giving, there are also several sound financial benefits – most notably the reduction of your tax burden in both the short and the long term.

Ways to give.

For 2025, the lifetime gift tax exemption – the amount you can leave in your estate without triggering estate tax – is $13.99 million. (Married couples can shield twice that amount.) Although this exemption has traditionally increased with inflation each year, it is currently set to be cut in half at the start of 2026. While most people will fall well under these thresholds, those meeting them must keep these upcoming changes in mind when developing their investment and giving strategy for the next few years.³

Also, in 2025, the gift tax annual exclusion amount has jumped to $19,000, up from $18,000 in 2024. That means you can give away up to $19,000 to as many individuals as you’d like with no federal gift tax consequences. For parents with married children, this limit is multiplied by four to $76,000 ($19,000 from each parent to each child).⁴

Another way to lower one’s taxable estate is to designate charities as beneficiaries.

A Donor Advised Fund allows you to place assets in a “fund” that’s not counted towards your total estate value. This lets your investments grow tax-free since they're set aside for charity, while you can advise how to invest and where to donate funds. (If you should pass away before donating, your heirs can manage and distribute the money.)

A Charitable Remainder Trust (CRT) is a trust that lets you donate to charity while providing you and your heirs with tax savings. These are typically funded with highly appreciated long-term assets like real estate or stocks. This creates an income stream for the beneficiaries, with the remainder of the trust's assets donated to one or more charities.

Cash or stock?

While cash is often the easiest method, gifting assets like stocks or real estate can have additional benefits. Not only does the donor receive a charitable deduction, but the donor also does not realize any capital gains on the gift. While tax deductions for charitable contributions made in cash are generally limited to 60% of gross income, non-cash contributions often have lower limits that depend on the type of asset donated.

The bottom line.

No matter how you opt to make a gift of your money, the benefits will be felt by everyone involved. However, it is important to keep track of these contributions to help maximize your deductions and ensure you’re not adding to your tax burden. If you would like help mapping out a strategy for your charitable giving, let’s chat. Our goal is to help you navigate the options that are available to you and arrive at a solution that will help you meet your goals.

¹Giving USA Foundation, The Annual Report on Philanthropy, 2024.

²Dunn, Elizabeth W., Lara B. Aknin, and Michael I. Norton. "Spending Money on Others Promotes Happiness." Science 319, no. 5870 (March 21, 2008): 1687–1688.Employee Benefits Security Administration, U.S. Department of Labor, Sept. 2023.

³"Preparing for Estate and Gift Tax Exemption Sunset.” Merrill Lynch, Bank of America Corporation, March 11, 2024.

⁴IRS.gov, October 22, 2024.

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