Charitable Giving Tax Strategies: Donor-Advised Funds, Appreciated Property, and CRTs

By Yarik Yarosh, CPA ·September 5, 2026 ·7 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

Charitable giving is one of the few areas of the tax code where good planning can produce a triple benefit: a tax deduction for the donor, avoided capital gains on appreciated assets, and a meaningful contribution to the donor’s chosen causes. Under IRC 170, taxpayers who itemize can deduct charitable contributions up to certain AGI limits (60% for cash to public charities, 30% for appreciated property to public charities, 20% for contributions to private foundations). The deduction for donating appreciated property is particularly powerful because the donor deducts the full fair market value while permanently avoiding capital gains tax on the appreciation. A business owner who donates $100,000 of stock with a $20,000 basis saves approximately $37,000 in income tax (37% bracket) plus $19,040 in capital gains tax ($80,000 gain x 23.8%), for a combined tax benefit of $56,040 on a $100,000 donation. Compare that to selling the stock, paying the capital gains tax, and donating the remaining cash, which produces only a $37,000 income tax benefit. The appreciated property strategy saves an additional $19,040.

✓Key takeaway

Charitable contribution AGI limits:

Type of Contribution	Public Charity	Private Foundation
Cash	60% of AGI	30% of AGI
Appreciated property (long-term, FMV election)	30% of AGI	20% of AGI
Appreciated property (basis election)	50% of AGI	25% of AGI
Carryforward for excess	5 years	5 years

Tax benefit comparison (donate cash vs. appreciated property):

Method	Tax Benefit on $100,000 Donation
Donate cash	$37,000 income tax deduction (37% bracket)
Donate appreciated stock (FMV $100,000, basis $20,000)	$37,000 income tax deduction + $19,040 avoided capital gains = $56,040 total
Sell stock, donate proceeds	$37,000 deduction minus $19,040 capital gains tax = $17,960 net benefit

What are the most tax-efficient giving strategies?

Hypothetical example

Round numbers. A business owner (37% bracket, $500,000 AGI) wants to donate $50,000 to various charities this year and $50,000 over the next 5 years.

Strategy 1: Standard cash donations each year

Year	Donation	Tax Savings (37%)	Standard Deduction Impact
2025	$50,000	$18,500 (if itemizing)	Must exceed $31,500 standard deduction (MFJ) to benefit from itemizing
2026	$10,000	$3,700 (if itemizing)	May not exceed standard deduction; partial or no benefit
2027	$10,000	$3,700	Same problem
2028	$10,000	$3,700	Same
2029	$10,000	$3,700	Same
2030	$10,000	$3,700	Same
Total donations	$100,000	$37,000 (if all years itemize)

Problem: In years 2026-2030, the $10,000 donation may not push total itemized deductions above the standard deduction, meaning some or all of the charitable benefit is lost.

Strategy 2: Donor-advised fund (bunching strategy) Contribute the full $100,000 (5 years of giving) to a DAF in a single year, then distribute grants to charities over time.

Year	DAF Contribution	Tax Deduction	Grants to Charities
2025	$100,000	$100,000 (itemize this year)	$20,000
2026	$0	$0 (take standard deduction)	$20,000
2027	$0	$0 (take standard deduction)	$20,000
2028	$0	$0 (take standard deduction)	$20,000
2029	$0	$0 (take standard deduction)	$20,000
Total tax savings		$37,000 (all in Year 1)	$100,000 to charities
Standard deduction savings (Years 2-5)		$46,620 (4 years x $31,500 x 37%)

By bunching, the taxpayer gets the full $37,000 charitable deduction in Year 1 AND takes the standard deduction in Years 2-5 (saving $11,655/year in tax from the standard deduction they would have lost if they itemized small amounts). Net benefit: significantly higher than spreading donations.

Strategy 3: Donate appreciated stock to DAF Instead of contributing $100,000 cash to the DAF, contribute $100,000 of appreciated stock (basis $30,000, held over 1 year).

Item	Cash Donation	Appreciated Stock Donation
Charitable deduction	$100,000	$100,000 (FMV)
Income tax savings (37%)	$37,000	$37,000
Capital gains avoided	$0	$16,660 (23.8% of $70,000 gain)
Total tax benefit	$37,000	$53,660
Cost of donation (after tax benefit)	$63,000	$46,340

Strategy 4: Charitable Remainder Trust (CRT) A business owner (age 62) wants to sell a $2,000,000 business interest (basis $200,000) and create an income stream in retirement.

Without CRT (sell and invest)	With CRT
Sale price: $2,000,000	Contribute business interest to CRT
Capital gains tax: $428,400 (23.8%)	CRT sells interest: $0 capital gains (CRT is tax-exempt)
After-tax invested: $1,571,600	Full $2,000,000 invested inside CRT
Investment income (5%): $78,580/year (taxable)	CRT pays 5% annuity: $100,000/year (partially taxable)
Charitable deduction: $0	Charitable deduction: ~$400,000 (PV of remainder interest)
Tax savings on deduction: $0	Tax savings: ~$148,000

CRT Summary	Amount
Capital gains avoided	$428,400
Income tax deduction (over 5-year carryforward if needed)	~$148,000
Additional annual income ($100K vs. $78.6K)	$21,420/year
Charity receives remainder at death	~$2,000,000+ (depending on investment returns)
Total lifetime tax benefit	$576,400+

CRT types:

Type	Payout
Charitable Remainder Annuity Trust (CRAT)	Fixed dollar amount each year (does not change)
Charitable Remainder Unitrust (CRUT)	Fixed percentage of trust value each year (fluctuates with trust value)

Strategy 5: Qualified Charitable Distribution (QCD) For business owners over 70.5 with traditional IRAs:

Without QCD	With QCD
Take $105,000 RMD; included in AGI	Direct $105,000 from IRA to charity; excluded from AGI
AGI: $605,000	AGI: $500,000
Donate $105,000 to charity (itemized deduction)	No separate donation needed
Net AGI reduction: $105,000 (deduction)	AGI reduction: $105,000 (exclusion)
But: higher AGI increases IRMAA (Medicare), NIIT threshold, other phase-outs	Lower AGI reduces IRMAA, NIIT, and other AGI-based taxes

The QCD is superior to taking the RMD and donating cash because it reduces AGI directly, while a charitable deduction only reduces taxable income. AGI affects Medicare premiums (IRMAA), Social Security taxation, NIIT thresholds, and various phase-outs.

Corporate charitable contributions (C-Corp):

Rule	Details
Deduction limit	10% of taxable income (before charitable deduction)
Carryforward	5 years
Food donations	Enhanced deduction (up to 15% of taxable income for food inventory donations)
S-Corp and partnership	Deduction passes through to individual shareholders/partners (subject to individual AGI limits)

Illustrative numbers only, not a real client and not advice for your facts.

What are the deduction limits for charitable contributions by businesses?

C-Corporations can deduct charitable contributions up to 10% of taxable income (computed before the deduction, NOL carrybacks, and certain other items), with excess contributions carried forward for 5 years. Sole proprietors, partners, and S-Corp shareholders deduct charitable contributions on their personal returns, subject to limits based on the type of property donated and the type of recipient: cash to public charities is limited to 60% of AGI, appreciated capital gain property to public charities is limited to 30% of AGI, and contributions to private foundations face lower limits. Donating appreciated property held more than one year (such as stock) lets you deduct the full fair market value while avoiding the capital gains tax you would owe if you sold it first. A donor-advised fund lets you bunch multiple years of charitable giving into a single tax year to exceed the standard deduction threshold, then recommend grants from the fund over time.

Related guides:

Charitable Giving Strategies for Business Owners: Donor-Advised Funds, CRTs, Qualified Charitable Distributions, and Bunching

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Cite this page

Yarik Yarosh, CPA. "Charitable Giving Tax Strategies: Donor-Advised Funds, Appreciated Property, and CRTs." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/small-business-charitable-giving-strategies-donor-advised-fund

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.