Chances are that your inbox is full of reminders that today is #GivingTuesday. The day—which is always the Tuesday after Thanksgiving—made its debut in 2012. The day kicks off the giving season and is intended to celebrate generosity, more or less the opposite of the spending-heavy Black Friday and Cyber Monday that precede it.
Charitable Giving Impact
It’s worked. According to GivingTuesday, an independent nonprofit organization that shares a name with the day, the impact of Giving Tuesday in 2023 was a whopping $3.1 billion.
Giving to U.S. charities was up, overall by the dollars, in 2023, according to an annual report from Giving USA, with individuals, bequests, foundations, and corporations hitting an estimated $557.16 billion. That reflects an overall boost in dollars, but adjusted for inflation, giving actually declined by 2.1%. The increase in dollars resulted from the growth of the stock market and gross domestic product (GDP), as both performed better than many economists expected in 2023.
(You can see visual representations—yes, charts—of the data in the report in last week’s Tax Breaks.)
The report confirms a decline that’s been happening for many U.S. nonprofits. Not only did the total number of individuals drop (they fell by 3.4%), but donations are not keeping up with inflation. In 2023, individuals—the largest category of funders by total dollar amount—donated $374.4 billion, up 1.6% in today’s dollars but down 2.4% when those dollars are adjusted for year-over-year inflation.
This is notable because it isn’t representative of the economy. Last year, for many individuals, gains outpaced inflation—in 2023, for example, stocks generated a 24% gain (19.3% adjusted for inflation).
There may be a variety of explanations for the giving drop, but many point the finger at the 2017 tax reform. Under the Tax Cuts and Jobs Act (TJCA), the standard deduction for individuals nearly doubled and has continued to grow to keep pace with inflation. In 2025, the standard deduction amounts will increase to $15,000 for individuals and married couples filing separately, representing an increase of $400 from 2024. Married couples filing jointly will see a deduction of $30,000, a boost of $800 from 2024, while heads of household will see a jump to $22,500, an increase of $600 from 2024.
That means fewer taxpayers are itemizing—and you must itemize your deductions on Schedule A to claim a charitable deduction.
Charitable Giving Tips
Many Americans donate even if they can’t claim a tax deduction. Some of the tax rules that apply to charitable donations—like checking to see that the organization has its paperwork in order—are good rules to follow even if you’re not claiming a tax deduction.
No matter whether you’re hoping for a tax break on your gift, or just feeling generous, here are some tips to keep in mind as you give this year:
If you’re looking for a deduction, itemize. You must itemize your deductions to claim a charitable deduction on your tax return. If you’re falling short of the limit, consider bunching your gifts—making a significant donation in one year to take advantage of the deduction and giving less in other years. For example, if you always give $5,000 to your alma mater, consider giving $15,000 in 2024 and skipping the next two years.
Plan your giving. If you find it challenging to write one big check due to cash flow and other commitments, consider sprinkling your charitable gifts throughout the year.
Choose carefully. Remember, for federal income tax purposes, only donations to qualified charitable organizations are deductible. But even if you don’t plan on the deduction, it’s a good idea to check out the credentials of a potential charitable organization before you donate. If you’re looking for a tax break, you can always confirm an organization’s charitable status through the IRS website using its Search Tool. You also can confirm charitable status by calling the IRS toll-free at 1.877.829.5500. Keep in mind that churches, synagogues, temples, and mosques are considered de facto charitable organizations and are eligible to receive deductible donations even if they’re not on the list—some exceptions apply, so be sure and ask if you’re not sure. Some sites, like Charity Navigator, can give you more information (including a peek tax returns and financials) about organizations you hope to support. Forbes also maintains a list of charities.
Get a receipt—even for cash. As a best practice, always ask for a receipt. Almost any charitable organization will happily offer you one. You don’t have to submit this documentation along with your tax return, but you need to be prepared to provide it in case of an audit. Cash donations, no matter the amount, must be substantiated by a bank record such as a canceled check or credit card receipt, clearly annotated with the name of the charity or in writing from the organization. The writing must include the date, the amount, and the organization that received the donation.
Don’t overlook payroll deductions. Your employer may participate in a charitable giving program that allows you to make contributions directly from your paycheck—some companies may even match your donation, increasing your impact. If you make a contribution by payroll deduction, record-keeping requirements require that you retain a pay stub, form W-2, or other document furnished by your employer that shows the total amount withheld as a charitable donation, along with the pledge card that shows the name of the charity. For federal workers, a pledge card with the name of a Combined Federal Campaign will meet these requirements.
Pay attention to donor incentives. A charitable donation is deductible only to the extent that the donation exceeds the value of any goods or services received in exchange. If you make a donation and receive something in exchange—anything from a coffee mug to a plated dinner—you can only deduct the cost of your donation less the value of the item received. If you’re not sure of the value of an item or service received after a donation, just ask. Most charitable organizations will do the math for you and document the value of your donation on their thank you letter or receipt.
Consider donating appreciated assets. Donating property that has appreciated in value, like stock, can result in a double benefit. Normally, appreciated assets are subject to capital gains tax at disposition—whether by selling or gifting. But when you donate appreciated assets to charity, not only can you deduct the property’s fair market value—so long as you’ve owned it for at least one year—but you will also avoid paying capital gains tax. It’s a win-win for charities and donors.
Invest in donor-advised funds. A donor-advised fund, or DAF, can be an excellent option for charitable giving. A DAF is an account established at a public charity. Donating to a donor-advised fund makes you generally eligible for an immediate tax deduction even if the funds aren’t immediately turned over to charity. The funds are typically invested, and you can make grant recommendations to any qualified public charity.
Don’t forget about retirement assets. Typically, if you want to donate from your IRA, you’d have to withdraw those funds, pay the tax, and then make the donation. There is an exception: a qualified charitable distribution (QCD) allows you to roll funds directly from your IRA to a qualified charity. Those amounts can be used to satisfy your required minimum distributions (RMDs) for the year, and the amount donated is excluded from your taxable income—you won’t even have to itemize to do it. The total amount of QCDs that you can exclude from your gross income increased to $108,000 in 2025, up from $105,000 in 2024. In addition, as part of SECURE 2.0, you can make a one-time election for a QCD to a split-interest entity. That amount was initially $50,000, but adjusted for inflation, it will be $54,000 in 2025, up from $53,000 in 2024.
You can’t deduct the value of your time. The IRS does not allow a charitable deduction for volunteering your services, even if you can easily put a dollar amount on your time. So if, as an architect, you usually charge $350 per hour and use that time to help a qualified charitable organization, you’re allowed a deduction of $0—that’s not a typo. The same rule applies whether you’re a lawyer, doctor, artist, nurse, accountant, or writer at Forbes.
You can deduct expenses related to volunteering. While you can’t deduct the value of your time, most out-of-pocket expenses relating to volunteering are deductible so long as they’re not reimbursed to you or considered personal. Out-of-pocket charitable expenses that might be deductible include parking fees and tolls and other travel expenses. For 2024, the rate for mileage driven in service of charitable organizations is just 14 cents per mile. The rate is currently fixed by Congress and has never been adjusted for inflation—which is why it hasn’t budged in years, even though gas is more expensive. (It’s worth noting that the 2024 standard mileage rate for business is 67 cents per mile—some organizations will reimburse you for your mileage related to volunteering at a rate they have set themselves and may look to the business mileage rate as a mark of what’s reasonable.) As with other donations, keep good records for out-of-pocket expenses—documentation is critical.
Keep great records. Good records are always important when it comes to charitable giving, but even more so when it comes to donations of noncash items. You can generally take a deduction for the item’s fair market value—the price a willing buyer would pay to a willing seller. If you’re self-documenting the donation because it’s less than $500, be specific, noting the description and condition of the items. If you contribute property worth more than $5,000, you must obtain a written appraisal of the property’s fair market value. If you make noncash contributions (generally over $500), you may also be required to fill out one or more parts of Form 8283, Noncash Charitable Contributions.
Limits may apply. The amount you can deduct for charitable contributions is generally limited to no more than 60% of your AGI. Your deduction may be further limited to 50%, 30%, or 20% of your AGI, depending on the type of property you give and the type of organization you give it to.
Check the calendar. That means that to make your gifts count during the tax year, you must make them by December 31. Some rules apply. For example, contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. Credit card charges—even if they’re not paid off before the end of the year—are deductible so long as the amount is captured by year-end. Similarly, checks written and mailed by the end of the year will be deductible for this year even if they aren’t cashed in 2024. And, good intentions don’t count—making announcements that you intend to donate assets will not qualify for a deduction in the current tax year unless you make good on the pledge during the year.
Next Steps
Feeling generous? #GivingTuesday is a good opportunity to try your hand at charitable giving—it’s easy, for example, to make cash gifts. But if you’re considering more significant gifting, including long-term projects like trusts, pledges, or charitable foundations, reach out to an advisor who can help you identify and work toward your charitable goals.
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