Nonprofits, including churches, rely on the generosity of donors to sustain and grow their missions. While cash donations are the most common form of giving, there are many other ways individuals can support their church or nonprofit organization. From tax-advantaged giving strategies to legacy gifts that leave a lasting impact, understanding the range of charitable giving vehicles can help donors maximize their contributions while also benefiting from potential tax incentives.

Here are four giving options to help individuals make informed and meaningful decisions about their philanthropy.

1. Immediate Impact - Outright Gifts

• Cash Donations are the simplest way to give and remain the most straightforward and widely used method of charitable giving. Whether given as a one-time contribution or through recurring gifts, cash donations allow organizations to receive funds immediately, helping them sustain operations and fund essential programs.
• Donating Appreciated Securities (such as stocks, bonds, or mutual funds) that have increased in value can be a highly tax-efficient way to give. Instead of selling appreciated assets and paying capital gains taxes, donors can transfer them directly to a nonprofit organization. This allows them to receive a charitable deduction for the full fair market value of the securities while also avoiding capital gains taxes. Many organizations have brokerage accounts to facilitate these types of gifts, making the process seamless.

2. Leave a Lasting Gift - Planned & Legacy Giving

• With Bequests in a Will, donors can designate a specific amount or percentage of their estate to the organization through their will or living trust. These are often simple to set up, allowing donors to maintain control of their assets during their lifetime, and may reduce estate taxes.
• A donor may also name an organization through Beneficiary Designations (such as life insurance policies, IRAs, 401Ks). These are easy to arrange by updating a beneficiary form. The donor can designate a specific amount or percentage to the organization. These avoid probate, ensuring a quick transfer to the organization.
• With Charitable Remainder Trusts (CRT)*, the donor places assets in a trust that provides income to the donor, or other beneficiaries, for a set period or for life. Afterward, the remaining assets go to the organization. These can provide lifetime income to the donor or named beneficiaries, may reduce capital gains tax if funded with appreciated assets, and offer a charitable tax deduction.
• Conversely, Charitable Lead Trusts (CLT)* provide income to the organization for a set period before returning the remaining assets to the donor’s heirs. These can reduce estate taxes for heirs.

*Both of these types of trusts require the engagement of an estate planning attorney.

3. Giving Smartly - Tax-Advantaged Giving

• A Qualified Charitable Distribution (QCD) is a direct transfer of funds from an Individual Retirement Account (IRA) to a qualified charitable organization. This strategy is available to individuals aged 70½ or older. Unlike a traditional charitable gift, QCDs are useful whether you itemize or take a standard deduction because any funds distributed in this way offer an above-the-line deduction. Individuals can contribute up to $108,000 per year, and transfers must be transferred directly from the IRA custodian to the charity. Once individuals reach age 73, QCDs can satisfy all or part of the donor's required minimum distribution (RMD).
• A Donor-Advised Fund (DAF) is a charitable investment account that allows donors to make a contribution, receive an immediate tax deduction, and recommend grants/gifts to charities over time. Assets in a DAF can be invested and grow tax-free, potentially increasing the impact of their charitable giving. DAFs accept cash, securities, and sometimes, other appreciated assets.

4. Thinking Beyond Cash - Special Asset Donations

While cash, legacy, and tax-advantaged gifts are essential to nonprofits, donors can make a significant impact by contributing special assets. These gifts can offer unique tax advantages while supporting the mission of your favorite nonprofit.

• Real Estate – Donating property can provide substantial tax benefits, including avoiding capital gains tax and receiving a charitable deduction.
• Personal Property – High-value items such as artwork, vehicles, and collectibles can be gifted to generate funding for the organization.
• Business Interests – Transferring ownership stakes, shares, or partnership interests allows donors to support the nonprofit while potentially reducing their tax burden.

Exploring special asset donations can create meaningful, lasting contributions; but it is necessary to make sure the gift is acceptable to the recipient organization's gift receipt acceptance policy. In addition, the IRS has specific rules around appraisals and fair market values of special asset gifts. It’s always a good idea to consult your accountant in these situations.  

In summary, giving to a church or nonprofit organization is not a one-size-fits-all endeavor. By exploring these various options, with the guidance of a financial advisor or tax professional, donors can choose the approach that best fits their financial situation and long-term charitable goals. Whether giving now or planning for the future, each contribution plays a crucial role in sustaining the organization’s mission and impact. Thoughtful giving ensures that resources are available to serve communities, inspire change, and create a legacy of generosity for years to come.