What Impact Do You Want to Make?

Occasionally, Black Walnut Wealth Management provides content to the Traverse City Business News and other media outlets. This article ran in the December 2021 issue of the Traverse City Business News, and can be read in its entirety below. We have updated information to be current as of 2026.

Many people want to give to charity, but they often don’t know how to go about doing it. First, there are so many different organizations and worthy causes that it can feel overwhelming to choose. Then you have to think about: What is the best way to donate? How do I know if I’m making the most of my decision to give?

Let’s start here instead: What impact do you want to make? That’s the real question—and one you may need to do some soul searching to figure out. But once you find the answer, your philanthropic goals will be much easier to implement.

If charitable giving is important to you, your philanthropy should start with a plan. Sure, you can donate a large sum of cash and be done with it, but there are more effective ways to give. Here are five tax-favored strategies to ensure you don’t leave money and tax advantages on the table while making the type of impact you want to have.

1. Bunched Charitable Giving

Bunched charitable giving means combining several years of planned donations into a single tax year. This may help you benefit from itemizing deductions rather than taking the standard deduction. Beginning in 2026, itemizers generally can deduct only the portion of their charitable contributions that exceeds 0.5% of adjusted gross income, subject to other limits.

For those who don’t itemize, a separate deduction allows eligible cash gifts of up to $1,000, or $2,000 for married couples filing jointly. Comparing these options can help you decide whether to give annually or combine contributions into certain years.

2. Donor-Advised Funds

A donor-advised fund (DAF) lets you contribute assets now and recommend grants to eligible charities over time. You may qualify for a charitable deduction in the year you contribute, subject to itemizing and applicable limits. This can pair well with bunching while allowing you to recommend annual support for your favorite organizations.

Contributions are irrevocable, and the sponsoring organization takes legal control of the assets. Funds can be invested with the potential for tax-free growth before grants are made. Contributing appreciated securities held longer than 1 year may also help you avoid capital gains taxes on the donated appreciation.

3. Qualified Charitable Distributions

If you’re age 70½ or older, a qualified charitable distribution (QCD) allows you to transfer money directly from an eligible IRA to a qualifying charity. When the requirements are met, the distribution is excluded from your taxable income, whether or not you itemize deductions.

For 2026, the annual limit is $111,000 per eligible IRA owner. A married couple could give a combined $222,000 if each spouse qualifies and makes the gifts from their own IRA. The limit is adjusted annually for inflation.

A QCD can satisfy some or all of your required minimum distribution once RMDs begin, but you don’t have to wait until then to use this strategy. The money must go directly to the charity, and gifts to donor-advised funds don’t qualify. You cannot also claim a charitable deduction for an amount excluded from income.

4. Charitable Remainder Trusts

A charitable remainder trust (CRT) is an irrevocable trust that pays income to you or other named beneficiaries for a lifetime or a specified term of up to 20 years. At the end of that period, the remaining assets pass to designated charities. You may qualify for a partial charitable deduction when the trust is funded.

Assets contributed to the trust are no longer available for your personal use, although the trustee can sell and reinvest them under the trust’s terms. Payments to beneficiaries may be taxable. Because CRTs involve legal, tax, and administrative requirements, they should be evaluated with your financial, tax, and legal professionals.

5. Review Your Estate Plan

Lastly, it should go without saying, but make sure to review your estate plan before deciding on a charitable gifting strategy. Many of the tax-favored options mentioned above can and should be incorporated into an estate plan, as they will ultimately impact the size of your taxable estate.

Remember, you don’t want to leave money and tax advantages on the table if you don’t have to. It’s important to donate to the causes nearest to your heart, but it’s just as important to ensure your donations make sense for your overall financial plan.

So, what impact do you want to make? Regardless of which option or options you choose, your philanthropy needs a plan. Consider reaching out to an experienced CERTIFIED FINANCIAL PLANNER™ professional (CFP®) who is a fiduciary, so he or she can help you make the most of your charitable giving.

About Eric

Erickson Braund is the Founder and Chief Financial Officer at Black Walnut Wealth Management. He is a CERTIFIED FINANCIAL PLANNER® professional and a Chartered Retirement Planning Counselor℠. Eric brings over 20 years of experience working with high net-worth individuals and families, helping them achieve their goals of protecting and growing their wealth for retirement and for generations to come. To maintain his CFP® certification, Eric must meet CFP Board’s ethical standards and complete at least 30 hours of approved continuing education every 2 years, including 2 hours of ethics education.