How Philanthropy Fits Into a Long-Term Tax Reduction Strategy?

Looking for ways to pay less tax while helping worthwhile causes? You should be considering philanthropy as part of your long-term tax reduction plan.

This isn’t about casually dropping a cheque in the donation box each year. Strategic philanthropy that’s baked into your finances year after year is one of the best kept secrets for tax reduction.

Here’s why Philanthropy is:

• Legal
• Flexible
• Meaningful

Meaningful how you ask? Let’s just say philanthropy as part of your tax strategy can help fund inclusive disability support.

Why Philanthropy Is an Intelligent Tax Strategy?

If you ask most people, philanthropy is just something that’s done by nice people. But when used strategically, giving to charity is one of the best ways to reduce your taxable income year after year.

Here’s the basics:

Donations to qualified charities can be deducted from your taxable income. Not only that, but charitable gifts are often tax deductible above and beyond the standard deduction.

That means that every charitable donation has the potential to put less money in the government’s pocket and more back into your pocket. To really drive the point home.

Charitable Giving in the United States hit $592.5 billion in 2024. That’s not generosity. That’s tax strategists at their best.

And while philanthropy can help fund a number of worthy causes, including accessible education initiatives, let’s take a look at exactly how charitable giving works as part of your tax strategy.

Giving to charity reduces your taxable income, which in turn reduces your overall tax burden.

But here’s the kicker: Those savings compound year after year. Meaning, the sooner you start incorporating philanthropy into your tax planning the more you save on taxes over your lifetime.

And When That Giving is Done Strategically?

Pretty soon you’re helping to fund initiatives like inclusive disability support. Organisations that support people with disabilities rely on tax deductible gifts to provide critical services like accessible education, employment assistance and more. Giving to these causes provides both tax benefits and socially impactful results.

How Charitable Deductions Really Work?

Knowledge is power when it comes to saving on taxes. If you don’t know how charitable deductions work, you’ll leave a lot of money on the table. So let’s dig in.

Cash donations to public charities are deductible up to 60% of your adjusted gross income (AGI). Donations of appreciated assets like stocks are deductible up to 30%.

Want to Learn Something Crazy?

If you donate more than those percentages allowed in a given year, you can carry those donations forward up to five years!

Giving = Less Tax

The key is making sure those donations are going to qualified charities. Always obtain a receipt for your donations so you can claim them on your taxes.

Focusing your philanthropic efforts into a few key organisations also creates better tax results and bigger real-world impacts than spreading your donations too thin.

How Giving Helps Fund Inclusive Disability Support?

Here’s a fun fact you might not know. At any given time 1 in 4 adults live with some form of disability. Yet only about 2% of all philanthropic dollars go towards organisations that support people with disabilities.

Why Does This Matter?

Because creating a world where people with disabilities have access to everything from education, employment and more is not only highly impactful. It’s also one of the most underfunded arenas in the philanthropic space.

This creates HUGE opportunities for your tax reduction strategy to create real world impact. So how can giving to disability support organisations help you reduce your taxes?

The same way philanthropy helps reduce taxes:

Donations = tax deductions.

But because the need is so great and financial support is so low for these types of organisations.

Your tax savings will be going towards creating social impact like:

• Providing accessible education for people with disabilities
• Assisting people with disabilities to live independently
• Creating employment opportunities
• Much much more

When you give strategically to qualified charities, you never know who you could be impacting. Including those with disabilities.

Tax Smart Philanthropic Strategies to Implement Today

Nice talking theory. But let’s talk about actually reducing your taxes through smart philanthropic strategies.

Here are a few of the best strategies that you can start taking advantage of today. Some you may have heard before. Others not so much. Either way, these strategies all work.

Donation Bunching

Want to know one of the biggest philanthropic tax secrets?

Donation bunching.

Essentially, donation bunching allows you to combine multiple years worth of donations into one big charitable contribution.

How’s that help with taxes?

During the years you “bunch” donations, your itemised deductions will be well over the standard deduction.

That means your taxes that year are calculated using your itemised deductions. During the off years, you simply take the standard deduction.

Easy as that.

Donate Appreciated Assets

Let’s say you bought some stock a few years ago at $100. Today it’s worth $200. If you were to sell that stock, you’d be hit with capital gains tax on that $100 difference.

But what if you gifted that stock to charity instead?

When you donate appreciated assets like stock, there is no capital gains tax. Not only that but you receive a tax deduction for the full $200 value of the stock.

Not too shabby.

Donor Advised Funds

Donor-advised funds allow you to create your own little charity.

Giving to a donor advised fund allows you to take a tax deduction now for donations, but lets you distribute those charitable gifts to your chosen charities over time.

This allows you to:

• Claim a tax deduction for charitable donations in the current year
• Spread your philanthropic efforts out over time
• Easily donate to causes that help fund inclusive disability support year after year

Qualified Charitable Distributions

If you’re over 70.5 with a retirement account you can donate up to $100k directly to charity tax free thanks to qualified charitable distributions.

Not only does this count as charity, but it also counts towards your required minimum distribution if you’re of age.

Giving To Charity: Dos and Don’ts

Avoid these common charitable giving mistakes.

• Don’t give without keeping records: All charitable donations require a receipt for tax deduction purposes. Make sure you’re keeping good records of any and all donations.
• Don’t forget about the standard deduction: If your charitable contributions don’t put you above the standard deduction, you’re defeating the purpose of donating. Bunching donations helps prevent this.
• Don’t give to unqualified organisations: Always make sure the charity you’re giving to is qualified under IRS rules.
• Don’t wait until the end of the year to give: With philanthropic strategies like donor advised funds, plan your giving all year long.

Bringing It All Together

Philanthropy can be a powerful long-term tax reduction strategy.

You just have to know how to leverage it. By implementing some (or all) of the strategies above, you could start reducing your tax burden and funding worthwhile causes year after year.

And if you’re looking for a great place to start your philanthropic tax strategy. Consider giving to organisations that help fund inclusive disability support. You never know who you could be helping by giving to the right places.