DA Today

#1 Cash
Cash is the quickest and most convenient way to donate. You can give a one-time cash gift or set up recurring donations. You’re able to swipe a card or write a quick check. While this strategy requires the least amount of work to implement, there are more effective ways to donate that provide better benefits to both you and the charity.

#2 Donating a highly appreciated stock
Before you swipe your card or write a check, review your investment portfolio. Are there any stocks that you have held for more than a year with significant growth? If so, you may want to consider using that asset instead of your cash for tax purposes. Give to my favorite charity and save money in taxes? Sign me up!

Here’s how it works. When you sell a stock that has grown significantly (i.e. a highly appreciated stock), you will run into capital gains taxes. The rate is usually 15% or 20% for dentists depending on household income. If you donate that highly appreciated stock to a charity, you’re no longer on the hook for capital gains taxes. Keep in mind, this is not an all-or-nothing strategy. You could consider donating just a portion of your highly appreciated stock to lower your overall tax bill and diversify your portfolio.

#3 Donor-Advised Fund
If you want to make your life even easier, consider a Donor-Advised Fund. This is an investment account used for charitable purposes. Setting one up comes with multiple benefits. The biggest reason why charitably inclined dentists set up a Donor-Advised Fund is because it maximizes your tax deduction in a given year while allowing control over when you donate.

This is especially useful for dentists who are going to be above the standard deduction. If that’s you, then talk to your CPA about donation bunching. This is where you combine your donations for two years into one large contribution to your Donor-Advised Fund. By consolidating your donations, you could take a higher tax deduction in one given year and decide when you want to donate later.

While you wait to decide where to donate, you can invest your contributions which grow tax-free. This is the most tax-advantaged way to donate, so talk to your CPA or Financial Advisor if you think you’d benefit from setting one up.

These are important strategies to know because they can benefit both you and the charities. Spending time to set these up means more of your dollars are going towards a good cause while minimizing the total dollars out of your pocket.