By David L. Dunn, CPA/PFS, CFP®, CPWA®

A Season for Generosity and Strategy

December is the season when generosity meets urgency. Many high-income individuals start to think seriously about giving back, and for good reason. The end of the year brings not only holiday spirit but also a critical window for optimizing charitable contributions from both a tax and impact standpoint.

Charitable giving is often framed as a purely emotional act—one guided by values, faith, or community ties. While that sentiment is central, smart giving also demands strategy. When approached thoughtfully, giving can reduce taxes, enhance estate planning, and create a legacy far beyond the current tax year.

Donor-Advised Funds: Flexibility Meets Simplicity

Donor-Advised Funds (DAFs) are one of the most powerful tools available for high-income earners looking to structure their giving. These accounts let individuals contribute cash or appreciated assets, receive tax benefits in the year of contribution, and then distribute grants to qualified charities over time.

From a planning perspective, DAFs decouple the tax benefits from the actual charitable donation. That means you can make a large contribution in a high-income year to maximize tax advantages, even if you’re not yet sure which organizations you’ll ultimately support.

When funded with appreciated stock or other securities, DAFs become even more compelling. The donor avoids capital gains tax and may realize tax benefits, particularly when donating assets held for more than one year. This is a textbook example of leveraging existing wealth to fund purpose.

Appreciated Stock: A Tax-Efficient Vehicle for Giving

Many executives and professionals accumulate concentrated positions in company stock or other investments over time. Donating a portion of those appreciated shares to charity or a DAF is one of the most tax-efficient ways to give.

Consider this scenario: A tech executive holds $250,000 worth of stock purchased years ago for $50,000. Donating those shares directly to a qualified charity or DAF eliminates the capital gains tax on the $200,000 in appreciation and may provide tax benefits based on the current market value. That’s a powerful strategy for unwinding a concentrated position while aligning with personal values.

Gifting appreciated stock can be particularly effective when coordinated with other tax strategies like Roth conversions or tax-loss harvesting.

Integrating Giving with Estate Strategies

For many high-income households, charitable giving isn’t just about the current year’s tax return. It’s about legacy. Gifting strategies can and should intersect with estate planning to maximize generational impact and reduce estate tax exposure.

Here are a few planning techniques to consider:

Charitable Remainder Trusts (CRTs): These trusts let donors convert appreciated assets into lifetime income while reserving the remainder for charity. CRTs can provide tax benefits in the year of contribution and may help reduce estate taxes while delivering income over time.

Charitable Lead Trusts (CLTs): These are essentially the inverse of CRTs. The charity receives income for a set term, and the remainder passes to heirs. CLTs are useful in low-interest-rate environments and can help reduce taxable estate values.

Qualified Charitable Distributions (QCDs): For those over age 70½, QCDs allow direct gifts from IRAs to qualified charities. These distributions count toward Required Minimum Distributions (RMDs) but are excluded from taxable income. That’s a valuable tool for those who no longer itemize.

Family Foundations: These vehicles let families structure long-term giving with more control and involvement. While more complex than DAFs, they can support multi-generational philanthropy and create educational opportunities for heirs.

Coordinating charitable strategies with estate goals helps position your giving to serve a purpose beyond your lifetime while also may help reduce estate tax implications.

Why December Matters

December isn’t just a sentimental time to give. It’s the deadline for securing tax benefits for the current tax year. Any contribution made after December 31 won’t count toward this year’s return, and for those facing high marginal tax rates, that could mean a substantial lost opportunity.

There’s also the calendar effect. Many organizations rely on year-end giving for a significant portion of their annual funding. By giving strategically in December, you can support the missions that matter most to you when they need it most.

For executives navigating complex compensation schedules, liquidity events, or year-end bonuses, December also offers the chance to smooth taxable income and reduce adjusted gross income (AGI) with charitable contributions.

Bringing It All Together: A Strategic Giving Checklist

Before the year closes, consider the following steps:

Review Income and Gains: Assess your income year-to-date, including bonuses, RSUs, and capital gains. High-income years may be ideal for bunching charitable contributions.

Evaluate Highly Appreciated Assets: Identify positions with significant gains that could be donated directly to charity or to a DAF.

Discuss With Your Advisory Team: Coordinate with your CPA, estate attorney, an  advisor to ensure your giving strategy complements your broader wealth plan.

Execute Contributions Early: Custodians and charities get busy in December. Avoid processing delays by starting early.

Keep Documentation: Ensure you receive and store proper acknowledgment letters for any gift over $250.

Purpose First, Then Planning

The most meaningful giving starts with purpose. Which causes reflect your values? What change do you hope to see? Once that’s clear, the planning can help amplify your impact.

When structured thoughtfully, charitable giving can become more than a tax strategy. It can become an act of leadership, a tool for legacy, and a reflection of what matters most.

Ready to explore working together? Schedule a complimentary 30-minute consultation at www.daviddunn.com.

Disclosures

David Dunn Wealth LLC (DDW) is a member firm of The Fiduciary Alliance, LLC (TFA), a Securities and Exchange Commission-registered investment adviser. See full disclosure at www.daviddunn.com. Information contained herein is for informational purposes only and should not be construed as a solicitation for investment advice or for the purchase or sale of any securities, insurance, or other investment products. DDW does not provide accounting or public accountancy services. While information contained herein is based on sources deemed reliable, the accuracy and completeness are not guaranteed. DDW is independent and not affiliated with, endorsed by, or sponsored by Boeing, Microsoft, or their affiliates. References to these companies are for illustrative purposes only and do not imply any relationship or endorsement.