Giving to LA: A Win-Win
The people of LA need our help.
Support from around the world has been remarkable. Whether you are a Southern California resident or not, there are plenty of ways to help support the city of LA so let’s review your options.
Each donation type comes with its own set of tax implications. As always, consult with your tax advisor to receive advice on your personal circumstances and to prepare the necessary tax forms.
If you plan to donate to a nonprofit and are not sure of its legitimacy, Guidestar or Charity Navigator can verify a nonprofit’s 501(c)(3) status.
1. Donate Cash
Quick and easy giving. You receive a tax deduction up to 60% of your adjusted gross income (AGI). If you only give a little, your standard deduction might apply, and the gift won't reduce your taxes. Cash donations are simple to document – just keep a receipt or verification from the nonprofit when filing your taxes.
2. Donate Stock
Donating stock held in a brokerage account offers significant tax benefits specifically stock with high long-term unrealized gains.
By donating stock with high unrealized gains you can avoid paying capital gains tax on that stock AND you are allowed a deduction of up to 30% of your AGI on the fair market value of the stock.
For example, say you paid $1 for a stock five years ago and it’s now worth $100. Donate that stock and you avoid tax on the $99 in gains and you receive a $100 deduction.
If your deduction amount exceeds the AGI limit, you can carry forward those unused deductions for up to five years. Itemized deductions required to receive the benefit.
3. Qualified Charitable Donations (QCDs)
While donating stock from a brokerage account offers benefits, you can also make Qualified Charitable Donations out of your Traditional IRA if you are age 70 ½ or older in the current year. You can gift up to $108,000 in QCDs from your IRA in 2025.
If you are age 73 and older in 2025 and need to take required minimum distributions (RMDs) from your Traditional IRA, QCDs count towards your RMD. You also do NOT need to itemize your deductions in order to deduct the QCD from your taxable income so you can make QCDs in addition to your standard deductions.
4. Donor Advised Fund (DAFs)
Donor-Advised Funds allow for individuals to set up their own charitable accounts to donate cash. The donor can spread out those gifts over many years and to various qualified charities.
Contribute cash or stock to your DAF and donate over multiple years to as many qualified charities as you’d like. Itemized deductions are required to receive the benefit in the year of the contribution. AGI limits and carryforward rules apply to cash and stock contributions to a DAF.
DAFs are especially powerful in high-income years (i.e. selling a business).
5. Donate Physical Goods
If you donate physical goods like clothing, furniture, appliances etc., you can deduct the fair market value of the donation assuming you itemize the deduction in that year. The good(s) must be in “good” or better condition per the IRS rules to qualify for the deduction.
Get a receipt from the nonprofit organization for any donated items. For items worth more than $5,000, you may need a professional appraisal. You must not receive any good or service in return in order to receive a deduction. Itemized deductions are required to receive the benefit.
6. Small Business Donations
For pass-through entities (Sole proprietorships, Single-member LLCs, Partnerships, S-Corps), the donations flow through to each owner/partner/shareholder’s personal tax return as an itemized deduction.
For C-Corps, cash contributions are deductible up to 25% of taxable income. If donating physical goods, a C-Corp can deduct up to 10% of taxable income. Deduct the fair market value if the charity uses the good. If not used for the charity’s mission, deduction amount would equal the lesser of fair market value or adjusted basis.
If you don’t have the means to donate, there are plenty of other ways to support the cause. In Orange County, many restaurants and local businesses are donating a percentage of revenue to charities supporting LA fire victims.
Music venues across LA are holding benefit concerts. Futurebirds, a favorite of mine, donated 100% of their LA show ticket sales.
Whether you are able to donate your time, money or physical goods, every little bit goes a long way. While tax savings may not be the primary goal, consider donating for the double win of helping a great cause and potentially lowering your tax bill.
