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Financial management

Year-end charitable giving tips

Advice on end-of-year charitable giving—ways to give back, tax tips, tools and calculators, and suggestions for maximizing your impact.
8 minute read
  •  
December 05, 2022
Financial management
Charitable giving
Article
Tax tips
Taxes
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Headshot of Vanguard Chief Strategic Planning Officer Rebecca Moffett

President of Vanguard Charitable

It's almost the end of 2022, and many of us are reflecting on what the past year has brought and wondering what we can expect in 2023.

As the president of Vanguard Charitable, I'm proud of how our donors, team members, and partner organizations have worked to maximize the impact of charitable giving this year. Despite this year's economic uncertainty, our donors have used their donor-advised funds to support a record pace of giving. In fact, as Vanguard Charitable approaches our 25-year anniversary, we'll soon reach a milestone of $15 billion in total grants issued since our inception.

But of course, our world is facing many challenges as this year ends. Interest rates and inflation are on the rise while the markets have undergone extended volatility. From Hurricane Ian to the war in Ukraine, disasters and conflicts have brought continued hardships. All of this means that nonprofits need our support now more than ever.

As we all grapple with these challenges, you may or may not be able to engage in charitable giving this year in the same way you have in the past. But you may be able to get more out of the giving you are able to do, helping your charitable dollars go as far as possible for the causes you care about. After all, 2022 isn't over yet, and there's still time to make an even bigger difference.

What should you do? Focus on what you know.

Uncertainty can cause people to delay giving decisions. We're all facing an unpredictable environment and you may be wondering what the world will look like in 2023—including what long-term impact inflation will have and how the markets will perform. My advice? When it comes to decisions like this, focus less on what's unknown and more on what we can count on to be true. For example:

  • You can give back in more ways than one. We often hear our donors tell of the value of their "time, talent, and treasure." Volunteering, serving on a board, or offering other expertise in support of charities are wonderful ways to make a difference. For those with a skill in demand—think graphic design, accounting, or social media management—consider reaching out to your favorite nonprofit to see how you can "donate" your skills to further their mission.
  • There are tax benefits associated with giving. For those looking to donate financially, the primary incentives for charitable giving are the same as they've been in recent years and are unlikely to change before year-end.
  • Financial gifts can go far beyond cash. Remember that what you give may be just as important as how much you give. Despite this year's economic volatility, the recent bull market—the longest in history—could mean that you own appreciated or even highly appreciated assets. Donating them instead of cash could be a financially savvy move. You could also donate illiquid assets such as private equity, hedge fund interests, C corporation stock, real estate, LLCs, limited partnerships, and more. While not all charities can accept illiquid assets, a donor-advised fund provider like Vanguard Charitable can. Review your portfolio with a Vanguard advisor (if you're a client of Vanguard Personal Advisor Services®) to make sure you're maximizing the tax benefit of your charitable gifts.
  • We're here to help if you need us. Year-end is a critical time to examine your giving options. At Vanguard Charitable, we're focused on making sure our donors and the broader public are supported in meeting their giving goals, so we offer tools and resources to help you make the most of giving.
    • Our recent blog post on How to give in a time of inflation offers tips for making a difference in a time when many nonprofits are struggling with both higher costs and greater demand.
    • Our Tax Savings Calculator can give you an idea of how much you'll save depending on the amount of your charitable donations.*
    • Our resource on Developing your charitable budget helps you think through ways to expand your impact. Individuals who make a charitable budget are generally more likely to give and to increase their giving each year.
    • NAVi, our groundbreaking Nonprofit Aid Visualizer™, has been updated to help you tackle hunger and homelessness, two of the most pressing charitable needs prioritized by our donors.

5 end-of-year charitable giving tips

  1. Generally, only donations to a qualified 501(c)(3) charitable organization are eligible for tax deductions. (Vanguard Charitable is a qualified charitable organization, and we ensure that any grants you recommend from your account go to other qualifying organizations.)
  2. To get the tax deduction, make sure you itemize deductions on your tax return instead of taking the standard deduction. (You'll only want to do this if your itemized deductions exceed the standard deduction.)
  3. Although there are limits on your tax deduction (depending on your income and what you're donating), you can deduct excess contributions over the next 5 years.
  4. Strategies like donating appreciated assets (rather than cash) or directing your required minimum distribution to a qualified charity can help you save even more on taxes.
  5. The tax deadline to make donations for 2022 is December 31—but if you're donating anything other than cash, it can get a bit more complex and you'll want to initiate the process sooner.

Leverage a giving vehicle

Once you figure out how much you're giving and which assets you're donating, you might want to think about how you should give—specifically whether you should leverage a giving vehicle of some sort. There are a few different types of giving vehicles—private foundations, donor-advised funds, charitable trusts—and they differ in terms of features and costs. When comparing your options, keep in mind that many giving tools can be used together.

See the 3 elements of a successful giving plan (PDF)

A giving vehicle is one great way to make your giving budget go further. The purpose of a giving vehicle is simple: to transfer assets to charities in a carefully planned way that makes financial sense and maximizes your charitable impact over time.

What to consider when choosing a giving vehicle

See giving tools

Note: If you're planning on using a giving vehicle, make sure you pay close attention to the fees. It's important to remember that the lower the fees, the more money you'll have to donate to the charities you admire. At Vanguard Charitable, our donor-advised fund comes with the lowest all-in fee in the industry. That translates into a lot of extra dollars you can donate to the causes you care most about.

As we approach the end-of-year charitable giving deadline and consider the pressing needs of our world today, I continue to believe that philanthropy changes the world one life at a time. By approaching charitable giving thoughtfully and strategically, we can maximize our impact and reach even more lives. 

*The information provided is not intended to be relied upon in lieu of tax or legal advice. Please consult with a tax advisor or attorney for information related to your specific situation.

All investing is subject to risk, including the possible loss of the money you invest.

We recommend you consult a qualified tax advisor about your individual situation.

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