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End-of-Year Donations and Tax Implications

At the year's end, many people turn their thoughts to charitable giving. Donating to worthy causes helps those in need and can also offer tax benefits.

While giving is its own reward, it makes sense to maximize the tax benefits available. Below, we'll shed some light on different donation methods, recipients and contribution timings to help you maximize both your philanthropic and financial impacts.


Donation Methods

When thinking of charitable giving, you might think of putting cash in a collection plate, writing a check, or using your credit card to donate online. But cash donations are only one of several methods of charitable giving.

Other options include:


Stocks and securities

Donating appreciated stocks or securities can be a highly tax-efficient way to donate. You avoid paying the capital gains tax that would apply if you sold the assets first, and you can deduct the securities' fair market value on the donation date.1


Appreciated assets

Aside from stocks, you can also donate appreciated assets like real estate, artwork, or collectibles to charity. Like stocks, donating these assets helps avoid capital gains taxes and provides a tax deduction. However, the “related use” rule applies to art donations.

If the charity can use the artwork as part of its charitable purpose, the artwork is related-use property. In that case, you can deduct the work's fair market value. An example of related use property is donating a painting to an art institute for display.

On the other hand, if you donate artwork to a charity that does not use art for its charitable purpose, it's "unrelated use" property. In that case, you can deduct the lesser of your cost basis or its fair market value at the time of the donation.2 An example of this scenario would be donating a painting to the food bank because the food bank would likely sell the painting and use the funds to provide food for the needy.


Planned giving and charitable trusts

Planned giving involves arranging donations to be made in the future, often through wills or trusts.

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Before you donate to an organization, look it up on the IRS’s Tax Exempt Organization Search tool to ensure it’s a qualified 501(c)(3).8
  • A charitable remainder trust (CRT) provides income to the donor or other beneficiaries for a set period, after which the remaining assets go to the charity. Your initial donation to the trust (typically cash, stocks, ETFs, mutual funds, or real estate) is partially deductible, based on the amount of money or property that will eventually be transferred to the charitable beneficiaries.3
  • A charitable lead trust (CLT) provides income to the charity for a set period, with the remainder going to the donor's beneficiaries. You typically establish a CLT with a gift of cash or securities, and you can claim a deduction of up to 30% of your adjusted gross income (AGI) in the year you fund the trust.4

Donor-advised funds

A donor-advised fund (DAF) is a giving account established at a public charity, such as a community foundation. You contribute to the fund, the charity manages and administers the account, and you recommend grants to your favorite charitable organizations over time.

When you contribute to a DAF, you receive an immediate tax deduction worth up to 60% of your AGI and carry any unused deductions forward for up to five years.5


Choose the Right Recipients

Selecting the right charitable organization ensures your donation has the desired impact and qualifies for tax deductions.

Unfortunately, fake causes and charity scams increase during the holiday giving season and after major disasters. Use resources like Charity Navigator6 or GuideStar7 to confirm the organization's legitimacy and evaluate its financial health, accountability and transparency.

Look up the organization using the IRS’s Tax Exempt Organization Search tool to ensure it’s a qualified 501(c)(3) organization that qualifies for a tax deduction.8


Time Your Donations

You must donate by December 31 to qualify for a deduction in that tax year.

Cash donations are simple because you “make” the gift when you hand the cash or check to the charity, mail your donation, or enter your credit card online. However, gifts of securities and other assets aren't complete until you deliver the asset or, in the case of stock, ownership changes in the corporation’s or broker’s records.9

End-of-year donations provide an excellent opportunity to support causes you care about while benefiting from tax deductions. Want to make the most of your charitable giving? Talk with a Synovus financial advisor for advice on donation methods and strategically timing your contributions. With informed planning, you can make a difference in the lives of others in a way that also benefits you.

Important disclosure information

Asset allocation and diversifications do not ensure against loss. This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. IRS.gov, “Publication 561, Determining the Value of Donated Property,” updated March 11, 2024. Accessed September 4, 2024. Back
  2. David A. Levitt & Nancy E. McGlamery, “Supporting Charity with Works of Art,” accessed September 4, 2024. Back
  3. Thomas W. Bassett, “A Primer on Charitable Trusts (Part I),” American Bar Association, published September 21, 2021. Accessed September 4, 2024. Back
  4. IRS.gov, “Internal Revenue Bulletin: 2007-29,” published July 16, 2007. Accessed September 4, 2024. Back
  5. National Philanthropic Trust, “The Tax Advantages of Donor-Advised Funds,” accesed September 4, 2024. Back
  6. Charity Navigator, accessed September 4, 2024. Back
  7. GuideStar, “Nonprofit Lookup,” accessed September 4, 2024. Back
  8. IRS.gov, “Tax Exempt Organization Search,” updated May 9, 2024.Accessed September 4, 2024. Back
  9. IRS.gov, “Publication 526: Charitable Contributions,” published February 29, 2024. Accessed September 4, 2024. Back