The Most Expensive Way to Give Ma’aser
The Kol Nidrei appeals are behind us and the year-end campaigns will be arriving any day now. What I see over and over again is that a surprising number of people in this community give almost entirely in cash, whether by check, credit card, or wire. Most people give this way simply out of habit, because nobody ever showed them their options, and the result is that some of the most generous families around are using the least tax-efficient way to give tzedakah. There are better alternatives, and depending on your situation, they can help you get more out of your deduction and avoid capital gains taxes you would otherwise pay.
This year the conversation is more timely than usual, because the tax law passed last summer changed the rules on charitable deductions starting in 2026. If you take the standard deduction, you can now deduct up to $1,000 of cash donations, or $2,000 for a married couple. If you itemize, your donations are only deductible once they add up to more than half a percent of your income, so a couple earning $400,000 gets no deduction on the first $2,000 they give. And if you are in the top 37% tax bracket, your tax savings from donating are now capped at 35%, so a $1,000 donation saves you $350 instead of the $370 it would have saved last year. The deduction itself is worth a little less to most givers than it was a year ago, but the strategies below get much of their value from somewhere else, which is why this is a good year to finally look at them.
Many organizations already have the infrastructure to accept stock donations, and since you are giving the tzedakah anyway, you might as well give highly appreciated stock, which many people are holding in today’s market. Donating the shares directly lets you avoid the capital gains tax you would have owed on that growth when you sold, while you receive the same deduction you would have gotten by giving cash. In 2026, most married couples with taxable income up to $613,700 pay a 15% federal tax on gains from investments they have owned for more than 12 months. Consider one of those couples who typically gives $50,000 a year to tzedakahand owns $100,000 of ABC stock with a long-term gain of $65,000. If they give $50,000 of ABC stock instead of cash, the donated shares carry $32,500 of that gain, and the $4,875 in tax that would have come due on a sale is never paid. The organization receives the same $50,000, and higher earners who also owe the 3.8% net investment income tax save even more. And if the couple likes owning ABC, they can use the $50,000 in cash they would have donated to buy the shares back at a higher cost basis.
For any high-earning family that gives tzedakah regularly, a donor-advised fund, or DAF, is worth a serious look. Think of it as a charity middleman that holds your donation, giving you an immediate deduction without requiring you to send the money to the organization right away. You contribute cash or highly appreciated stock, take the deduction that year, and then send grants to the organizations you support over time, while the money stays invested and grows tax-free. That makes it easy to bunch several years of giving into a year when your income is higher, and today’s DAF providers have easy-to-use technology that makes tracking your contributions much simpler. Keep in mind that a DAF contribution is irrevocable.
For readers over 70 and 1/2, a qualified charitable distribution, or QCD, is an even cleaner option. It lets you send money directly from your IRA to a charity, and that money never shows up as income on your tax return, so the new floor and cap don’t touch it. Once you reach the age where required minimum distributions begin, a QCD also counts toward that requirement. The most common mistake I see is someone taking their full RMD into their checking account, paying tax on all of it, and then writing checks to the same organizations they were going to support anyway. In 2026, each person can give up to $111,000 this way, so a married couple where both spouses have their own IRAs can give up to $222,000 combined.
All of this takes more coordination than writing a check. Stock transfers between brokerage firms can take days or weeks, and they slow down considerably in late December, when everyone else has the same idea. DAFs need to be opened and funded, and QCDs need to be processed by your IRA custodian before year-end to count for 2026. So I would encourage everyone to get moving now and not wait until mid-December to start making charitable contributions.
None of these strategies asks anyone to give a dollar less. They let the same gift cost the giver less, while the organization receives exactly what it would have received anyway. If you have been writing checks out of habit, this is a good year to look at whether there is a better way to give. n
Jack Strulowitz is a Financial Advisor at Bernath & Rosenberg in Cedarhurst, NY, where he helps high–net worth individuals and families manage their investments and build comprehensive strategies for retirement, tax, and estate planning. For questions or to schedule a consultation, please contact [email protected] or 847-962-3352.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
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