How to Give Charitable Donations as Gifts

Giving to charitable organizations is a meaningful way to honor someone, celebrate a special occasion, or remember a loved one. This act allows individuals to support causes important to the honoree or their family. By directing resources to a qualified nonprofit, a charitable gift can create a lasting impact in the name of an individual.

Direct Contributions in Someone’s Name

Making a direct financial contribution to a charity in someone’s name is a straightforward method of charitable gifting. This involves sending cash, a check, or using a credit card directly to a chosen nonprofit. Many charities offer specific options on their websites or donation forms to designate a gift as “in honor of” or “in memory of” an individual.

To initiate this gift, select a qualified charity whose mission aligns with the honoree’s or family’s interests. Donations can typically be made through their online portal, by mail, or over the phone. During this process, specify that the contribution is a tribute gift and provide the name of the person being honored or memorialized.

The charity then handles notification, informing the honoree or their family about the gift. This notification typically comes as a card or email, acknowledging the donation without disclosing the specific amount. This ensures privacy regarding the gift’s value while still recognizing the thoughtful gesture. The individual making the payment receives the official donation receipt for tax purposes.

Using Donor Advised Funds for Gifting

Donor Advised Funds (DAFs) offer a flexible method for charitable giving, including gifts in honor or memory of an individual. A DAF functions as a charitable giving vehicle administered by a public charity, allowing a donor to contribute assets, receive an immediate tax deduction, and then recommend grants from the fund over time. This separates the initial contribution from subsequent fund distribution.

To use a DAF for gifting, the donor contributes cash, securities, or other assets to their established fund. This initial contribution is irrevocable, legally transferring assets to the sponsoring organization. Once assets are in the DAF, the donor can recommend grants to qualified public charities.

When recommending a grant to honor or memorialize someone, the donor specifies this intention. Most DAF sponsors provide options to indicate a grant is “in honor of” or “in memory of” an individual, often allowing for special notes. The DAF sponsor then processes the grant and handles notification to the honoree or their family, similar to direct contributions, without revealing the grant amount.

Gifting Appreciated Assets

Donating appreciated non-cash assets, such as stocks, mutual funds, or real estate, directly to a charity as a gift in someone’s name can offer significant tax advantages. Appreciated assets have increased in value since acquisition. This avoids capital gains taxes incurred if assets were sold first and cash donated.

To transfer appreciated securities, the donor typically initiates a direct transfer of shares to the charity’s brokerage account. This direct transfer is crucial for tax benefits, bypassing capital gains tax if the donor sold shares. For real estate, transfer a properly executed and notarized deed to the charity.

After the transfer, the donor informs the charity that the asset donation is a gift in honor or memory of an individual. The charity acknowledges the gift and notifies the honoree or their family. For non-cash donations exceeding $5,000, a qualified appraisal is generally required to substantiate the value for tax purposes, and IRS Form 8283 must be filed with the tax return.

Understanding the Donor’s Tax Implications

Tax implications for charitable donations, even when made as gifts in someone’s name, primarily affect the donor. The individual or entity making the contribution to the qualified charity is eligible to claim the tax deduction, regardless of who the gift honors. To claim a deduction, taxpayers must generally itemize deductions on Schedule A of Form 1040.

The deductible amount depends on the contribution type and the donor’s adjusted gross income (AGI). Cash contributions to public charities are generally deductible up to 60% of AGI. Appreciated non-cash assets, such as securities held over a year, are typically limited to 30% of AGI. If contributions exceed these AGI limits, the excess can be carried forward and deducted for up to five subsequent tax years.

Proper documentation is essential for charitable deductions. For cash contributions of $250 or more, the donor must obtain a written acknowledgment from the charity, stating the amount contributed and if any goods or services were received. For non-cash contributions, specific rules apply based on value: donations between $501 and $5,000 require a written acknowledgment and IRS Form 8283; those over $5,000 generally need a qualified appraisal in addition to Form 8283. Detailed guidance is in IRS Publication 526, “Charitable Contributions.”