Americans usually give to charity for two main reasons: to support a cause or organization they care about, or to leave a legacy through their support.
When giving to charitable organizations, some people choose to make cash donations.
Others understand that their support may also generate tax benefits, and they may opt for techniques that can maximize both the gift and the potential tax benefit.
A quick review of a few charitable choices
Direct gifts are just that: contributions made directly to charitable organizations. Direct gifts may be deductible from income taxes, depending on your individual situation. Beginning in 2026, taxpayers who do not itemize may also deduct up to $1,000 ($2,000 if filing jointly) of cash gifts to qualified organizations, although gifts to donor-advised funds generally do not qualify.2
Charitable gift annuities are not related to annuities offered by insurance companies. Under this arrangement, the donor gives money, securities, or real estate, and in return, the charitable organization agrees to pay the donor a fixed income. Upon the death of the donor, the assets pass to the charitable organization. Charitable gift annuities enable donors to receive consistent income and potentially manage their taxes.
Pooled-income funds pool contributions from various donors into a fund, which is invested by the charitable organization. Income from the fund is distributed to the donors according to their share of the fund. Pooled-income funds can enable donors to receive income, manage their tax burden, and make a future gift to charity.
Gifts in trust enable donors to contribute to a charity and leave assets to beneficiaries. Generally, these irrevocable trusts take one of two forms:
- With a charitable remainder trust, the donor or chosen beneficiaries can receive lifetime income from the assets in the trust, which then pass to the charity when the donor dies.
- With a charitable lead trust, the charity receives the income from the assets in the trust, which then pass to the donor’s beneficiaries when the donor dies.
Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with these rules and regulations.
Donor-advised funds are funds administered by a charity to which a donor can make irrevocable contributions. This gift may have tax considerations, which can be another benefit. The donor can also recommend that the fund make distributions to qualified charitable organizations.
Some people are comfortable with their current gifting strategies. Others may want a more advanced strategy that can maximize their gift and generate potential tax benefits. A financial professional can help you assess which approach may work best for you.
If you have any questions, reach out.
1. GivingUSA.org, 2026
2. IRS.gov, 2026