Cash is Usually The Most Expensive Way to Give

So, this year, do a kindness for your donors.

Tell them!

You don’t have to be a tax advisor, nor should they expect you to be.

But, as a philanthropy facilitator, it is your job to be your donor’s guide when it comes to sharing the best ways they can fulfill their desire to help you survive and thrive.

And I don’t just mean telling them whether to give a restricted or unrestricted gift. Or whether to take advantage of your matching gift challenge. Or whether to find out if they’re eligible for an employer matching gift. Though, of course, it’s fine to talk about all these things.

But, the most donor-centered thing you can tell them is that cash gifts usually cost them more than gifts from other assets.  So, it is advantageous – for them – to consider giving from other pots of accumulated assets.

You see, you want them to know you have their backs – just as much as they have yours. Because, if you help them save a little money, they’ll be grateful.  And this will make them happy. And they’ll connect that happiness to you and your nonprofit.

All good things!

Plus, most nonprofits simply don’t share this type of information. It still confounds me that they don’t.  They should.  So, when you share, you’ll stand out – in a really good way.

It’s one of the ways you can show donors you care about them for more than their money.

They’re helping you, so why not do whatever you can to help them.

Makes sense, right?

Less Expensive Ways to Make Philanthropic Gifts

Whenever someone can give assets that haven’t been taxed yet, they’ll generally come out ahead. Because once they give these assets to you, they avoid the taxes they would otherwise pay if they turned those assets into something liquid.  Here are four examples:

1. Appreciated Assets (e.g., stocks, mutual funds, exchange traded funds, personal and real property)

When people sell assets worth more than they paid for them, they owe capital gains taxes. But if they give these assets directly to you, they avoid the taxes completely. If they itemize, they can also deduct the full fair market value on their income tax returns – saving them even more money. And you receive the full current fair market value to further your good work.

BONUS: You may get a larger gift this way. Research shows people don’t treat all their money as if they have one big pool of it. Rather, they have separate mental accounts. When they spend resources, they keep track of that expenditure based on the mental account it came from.

• Gift from Income (Small Bucket Wallet): When a donor considers a $1,000 contribution against other expenses, the gift may seem too large a percentage of disposable income.

• Gift from Assets (Big Bucket Wallet): When this same $1,000 is considered as a percentage of total wealth (all cash savings and non-cash assets, shares, personal property, real estate, etc.), the gift may seem a relatively small percentage of investment income.

Most donors would love to make an outsize impact if they could. And if they have appreciated assets, they can. So, part of your job as a philanthropy facilitator is to actively promote stock gifts!

2. IRA Rollover (aka “Qualified Charitable Distribution)

Anyone 70½ or older can direct a gift straight from their IRA to an eligible charity. The money never passes through the donor’s hands, so it is generally excluded from their taxable income. This can be more beneficial than the charitable deduction they’d receive (assuming they itemize) if they gave cash. Starting at age 73, once IRS required minimum distributions (RMDs) begin, the benefits to the donor only grow.

HOW IT WORKS: RMDs generally are added to a person’s annual income and taxable upon receipt. But any amount given directly to charity counts toward the donor’s RMD. So, the unfortunate side effect of lifting them to a higher tax bracket is avoided. This has all sorts of benefits: They won’t face (1) a big surprise tax bill, (2) a potential surtax on net investment income, and (3) increases in Social Security premiums for Medicare Part B and Part D.

IRA owners age 70 ½ or older may charitably gift $111,000 in 2026 from an IRA tax-free.  Couples can each transfer this amount, for a total of $222,000. The gift must be transferred directly from the IRA to the charity; the money cannot first be paid to the donor (hence the “rollover” nickname).

ADDED DONOR BONUS: This is also a way for folks to reduce the balance in their IRAs, which lowers the amount of future RMDs. This is an often-overlooked opportunity. If you have donors interested in reducing the size of their IRA, it’s important to remind them of this rollover distribution opportunity.  Gifting IRA assets now can also provide a future estate tax savings for donors with taxable estates (over $15 million per individual in 2026).

3. Beneficiary Designation (e.g., insurance policy or retirement account)

Sometimes donors would love to leave a bequest, but just don’t want to visit an attorney.  You can offer an easier alternative by suggesting they consider naming you as a beneficiary of their IRA (or insurance policy no one in their family really needs) rather than providing for you in their will. As a charity, you’ll pay no income tax. And no estate tax. Other heirs, however, would be subject to both these taxes when leaving an IRA. When donors leave heirs an inheritance through non-IRA assets, only the estate tax comes into play. So, net/net, the donor gets to give away more money by giving astutely.

BONUS: It’s much easier for donors to change their beneficiary designation than it is for them to change their will. The former is a simple form they can request from the financial institution holding their IRA, insurance policy, bank or investment account, or donor advised fund. The latter requires a trip to an attorney, which is inconvenient and costs money. Don’t you want to increase your chances of securing a legacy gift by making it easy for donors?

WHY IT WORKS: Many donors simply don’t know they can do this.  They think naming their heirs as beneficiaries of their IRA makes sense, and they’ll leave any charitable bequests from other sources in their will. It should be exactly the reverse! Because non-charitable heirs pay double taxes – income and estate – while charities pay no taxes.

4. Donor Advised Fund (DAF)

More and more donors already have a donor advised fund — the money in it is committed to charity. So, they don’t need to reach into their pocket to make a cash gift. Year end is a sensible time to look at their balance and move some of it where it can do work. Good philanthropy facilitators know this, and make a point promoting DAF giving and specifically asking supporters if they have a DAF.

Always include a disclaimer. Always recommend donors consult with their personal advisors, reminding them in your communications your nonprofit does not offer professional legal or financial advice. Make it clear you are offering suggestions for informational purposes only, and they may wish to discuss this with their own professionals to (1) determine if they are applicable to their own situation, and (2) assure they are receiving the most accurate, up-to-date information.

Want More Year-End Giving Tips?

Grab my Year-End Fundraising Solution Kit – To-Do’s and Checklists. It’s a step-by-step comprehensive road map to effective year-end fundraising. After working 30+ years in the trenches, I can vouch for this stuff. It’s tried and true! Not satisfied? All Clairification products come with a 30-day, no-questions-asked, 100% money-back guarantee. You truly can’t lose!

And if you can’t do everything you wish you could this year, get ahead of the game and put it on your list for next year.