Charitable Giving 2023

According to Giving USA's Annual Report on Philanthropy, Americans were a little less generous last year than they were amid the height of COVID in 2020 and 2021. Total giving (individual and corporate donations, bequests and foundation giving) slid by 3.4 percent to $499.33 billion in 2022 from 2021 and the decline was a steeper 10.5 percent, when adjusted for inflation.

While individuals continue to account for nearly two-thirds of total giving, the rotten year for stocks and bonds, as well as inflation, put a dent into the results. “Giving by individuals totaled an estimated $319.04 billion, declining 6.4 percent in 2022 (a decline of 13.4 percent, when adjusted for inflation).” Additionally, Americans gave 1.7 percent of their personal disposable income to charity in 2022, the lowest level they had given since 1995. (The high-water mark was 2.4 percent in 2005.)

Despite the slide, people are still incredibly generous. With Giving Tuesday kicking off the year-end charitable season, here are some updated giving tips for 2023:

Only Itemizers Get a Tax Benefit: Past tax law changes require you to itemize your deductions, if you want to claim a tax benefit for charitable giving. Only about 10 percent of tax filers itemize, but in a given year, perhaps one where you have made more money, you can try to “bunch” deductions to push you above the itemized deduction threshold and accelerate charitable giving for that particular year. Additionally, if you have a taxable investment account, you can gift highly appreciated securities to charities: you'll write off the current market value, not just what you paid, and avoid capital gains taxes.

Retirees Can Avoid Taxable Income and Feel Virtuous: If you’re over 70 ½, consider a Qualified Charitable Distribution (QCD), which allows you to gift up to $100,000 directly from your IRA to a public charity (not to a private foundation, a charitable supporting organization or a donor advised fund), without having to include the distribution in your taxable income. If you use the QCD, you can’t deduct the amount as a charitable contribution, but if you are lucky enough to not need the money for cash flow, a QCD will allow you to avoid paying taxes on the distribution, and it may also satisfy your Required Minimum Distribution.

Consider Donor Advised Funds (DAFs): These accounts allow you to contribute cash, appreciated assets, or investments, take an immediate tax deduction on the contribution, and then grant to an eligible IRS-qualified public charity in the future. DAF funds can be invested for tax-free growth and allow you to give in a year when you have had higher than expected income, or when you are trying to bunch deductions. Many financial firms and community foundations make DAFs available-be sure to check on fees as well as account minimums.

Be Cautious and Vet Your Charity: Do not donate over the phone or give anyone your credit card or other personal information until you verify it's legit with the IRS’s Tax Exempt Organization Search tool. The tool provides information about an organization's federal tax status and filings. To see how much of your donation goes to supporting programs (versus overhead), access resources like the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Watch, GuideStar, Charity Navigator and GiveWell.

Keep Good Records: For any cash or property valued at $250 or more, you must have a receipt (bank record, payroll deduction or written communication) identifying the organization, the date and amount of the contribution and a description of the property. If you are facing the end of year deadline, use a credit card, so the donation is deductible as of the date the account is charged.