The Power of Giving: Charitable Giving Through QCDs and Low-Cost Basis Stock

Brian Robinette

September 23, 2025

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Charitable giving is not only a meaningful way to support causes you care about, but it can also be an effective part of a broader financial and tax strategy. Two particularly tax-smart methods of giving—Qualified Charitable Distributions (QCDs) and gifting appreciated stock with a low-cost basis—offer donors a way to maximize their impact while minimizing tax liabilities.

As more donors look for ways to give efficiently, understanding these two strategies can be crucial, especially for those in retirement or those who have seen significant appreciation in their investment portfolios.

Qualified Charitable Distributions (QCDs)

A Qualified Charitable Distribution is a direct transfer of funds from an Individual Retirement Account (IRA) to a qualified charitable organization. Available to individuals aged 70½ or older, QCDs allow donors to exclude the donated amount from their taxable income, which can be especially beneficial for retirees who do not need the income from required minimum distributions (RMDs). Check writing can be set up on your IRA for ease and to make every charitable donation count.

Key Benefits of QCDs:

  • Tax-Free Transfer: QCDs are not counted as taxable income, which may help donors stay in a lower tax bracket or avoid other income-based surcharges, such as Medicare’s Income-Related Monthly Adjustment Amount (IRMAA).
  • Satisfies RMDs: For individuals aged 73 or older (as of 2025), QCDs count toward their required minimum distribution for the year. This means donors can fulfill their RMD obligations while supporting a charitable cause.
  • No Itemization Required: Because QCDs are excluded from income, donors benefit even if they do not itemize deductions on their tax returns.

Eligibility and Limits:

  • You must be at least 70½ years old at the time of the donation.
  • The maximum annual QCD amount is $108,000 per individual ($216,000 per couple if both spouses qualify).
  • The funds must be transferred directly from the IRA custodian to the qualified charity.

Note: QCDs cannot be made to donor-advised funds or private foundations.

Accredited By:

Brian Robinette
Senior Vice President Wealth Advisor
Brian Robinette
CFP®, CRPS®

Brian combines his wealth management, retirement, and financial planning experience to help high net-worth individuals, business owners, families, and retirees. He designs, implements, and monitors customized wealth plans with the focus on his clients’ short and long-term goals and objectives. Helping clients solve comprehensive and complex financial challenges motivates and gratifies him. Brian joined Fragasso […]

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This article has been reviewed for accuracy by Fragasso's leadership team and accredited by Brian Robinette to help ensure the information reflects current financial planning and wealth management principles.

Gifting Low-Cost Basis Stock

Another savvy charitable giving strategy involves donating appreciated securities—such as stocks, mutual funds, or ETFs—that have significantly increased in value since their purchase.

Why It Works:

When you donate appreciated stock that you’ve held for more than one year, you can deduct the fair market value of the asset on the date of the gift and avoid paying capital gains taxes on the appreciation.

Example:

Let’s say you purchased stock for $5,000 (your cost basis), and it has appreciated up to $30,000. If you sell the stock, you’d owe capital gains tax on the $25,000 gain. However, if you donate the stock directly to a charity, you avoid the capital gains tax and still receive a charitable deduction of $30,000.

Key Benefits:

  • Double Tax Benefit: You avoid capital gains tax and receive a deduction for the full fair market value.
  • Maximized Giving: The charity receives the full value of the asset without paying taxes, making it a more efficient transfer of wealth.
  • Portfolio Rebalancing: Donating appreciated assets is also a strategic way to rebalance your investment portfolio without triggering taxable gains.

Guidelines and Considerations:

  • The assets must be held for more than one year to qualify for the fair market value deduction.
  • The deduction limit is typically up to 30% of your adjusted gross income (AGI) for appreciated securities.
  • Donating to a donor-advised fund can streamline the process, especially if you want to make multiple charitable gifts over time.

Choosing the Right Strategy

Both QCDs and gifting low-cost basis stock are effective ways to give back, but the best strategy depends on your financial situation, tax bracket, and philanthropic goals.

Use QCDs if:

  • You’re 70½ or older.
  • You’re subject to RMDs and don’t need the income.
  • You don’t itemize deductions and want to reduce your taxable income.

Use appreciated stock gifts if:

  • You have highly appreciated investments held for more than a year.
  • You want to avoid capital gains taxes.
  • You itemize deductions and want to maximize your charitable write-offs.

In some cases, combining both strategies can be even more impactful. For instance, retirees with both IRAs and taxable investment accounts can use QCDs to reduce taxable income and appreciated securities to support donor-advised funds or endowments.

Final Thoughts

Strategic charitable giving is about more than generosity—it’s about maximizing the benefits for both the donor and the recipient. Whether you’re managing a high-net-worth portfolio or planning for retirement, incorporating tax-efficient giving strategies like Qualified Charitable Distributions and appreciated stock donations can enhance your legacy while supporting the causes that matter most to you.

As with any tax strategy, it’s wise to consult with a tax professional and your financial advisor at Fragasso to ensure your giving plan aligns with your broader financial goals.

Smart Giving Strategies: Common Questions About QCDs and Donating Stock

What is a Qualified Charitable Distribution (QCD) and who is eligible?

A Qualified Charitable Distribution (QCD) is a tax-efficient way to donate directly from your IRA to a qualified charity. Individuals age 70½ or older can use QCDs to transfer up to $108,000 per year (as of 2025) without including the amount in their taxable income. For retirees subject to Required Minimum Distributions (RMDs), QCDs can count toward satisfying those requirements while lowering taxable income.

What are the tax benefits of donating appreciated stock to charity?

Donating appreciated stock allows you to avoid capital gains taxes while still claiming a charitable deduction for the full fair market value of the asset. For example, if you purchased stock for $5,000 and it’s now worth $30,000, gifting it directly to a qualified charity avoids capital gains on the $25,000 gain and provides a $30,000 deduction. This double benefit maximizes both your giving impact and your tax efficiency.

Should I use a QCD or donate appreciated stock for charitable giving?

The best strategy depends on your financial situation. QCDs are often ideal for retirees over 70½ who want to reduce taxable income and meet RMD requirements without itemizing deductions. Donating appreciated stock works best if you have highly appreciated investments, want to avoid capital gains taxes, and plan to itemize deductions. In some cases, combining both strategies can offer the greatest tax and philanthropic benefits.

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