Tax-Smart Giving for Churches: How to Help Donors Give More Strategically
Generosity is first a response to God’s grace, not a tax strategy. Yet helping donors understand wise ways to give can remove unnecessary obstacles and allow them to support the ministry they care about more effectively.
For church leaders, tax-smart giving is part of good stewardship education. Many members hold assets, retirement accounts, or donor-advised funds that could be used to support the church, but they may not know the options available to them.
The goal is not to pressure people into giving. It is to help them make informed, faithful decisions with the resources God has entrusted to them.
“Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver” (2 Corinthians 9:7).
Tax laws and individual circumstances vary, so churches should encourage donors to consult a qualified tax professional, financial adviser, attorney, or plan administrator before making a gift. But there are several common tax-smart giving options every church leader should understand.
Why Tax-Smart Giving Matters for Churches
Many donors give from their checking account because it is familiar and simple. Cash gifts are meaningful and important, but they are not the only way to give.
Some donors may be able to give more strategically through a donor-advised fund, an IRA charitable distribution, or appreciated stock. When a church makes these options clear and easy to use, it serves both the donor and the ministry.
Tax-smart giving can help a church:
Equip members to make informed generosity decisions
Create more opportunities for year-end giving
Strengthen relationships with financially engaged donors
Diversify the ways people can support ministry
Encourage long-term generosity and legacy planning
1. Donor-Advised Funds
A donor-advised fund, often called a DAF, is a charitable giving account maintained by a sponsoring organization. After a donor contributes to the fund, the sponsoring organization has legal control of the contribution, while the donor retains advisory privileges over future grants and investments. The IRS explains the basic structure of donor-advised funds here.
For many donors, a DAF simplifies charitable giving. They may contribute cash, securities, or other eligible assets to the fund, then recommend grants to qualified charities over time.
What churches should know about DAF giving
Churches should make it easy for DAF holders to recommend a grant. That means clearly providing:
Your church’s legal name
Mailing address
Employer Identification Number, if appropriate
Instructions for designating a ministry fund or project
A contact person for questions
Some fund sponsors have rules around grants connected to personal benefits, event tickets, or legally binding commitments. If your church uses pledges or campaign commitments, use clear language such as “estimate of giving” or “giving intention” when appropriate, and encourage donors to confirm their options with their DAF sponsor and adviser.
A DAF is often a tool for donors who already care deeply about charitable giving. Thoughtful communication and strong donor relationships can help them connect their philanthropic priorities with the mission of the church.
2. Qualified Charitable Distributions From an IRA
A qualified charitable distribution, or QCD, is generally a direct distribution from an eligible IRA to a qualified charitable organization. Under current IRS guidance, donors must meet age and account requirements, and the transfer must be made directly from the IRA trustee or custodian to the charity. The IRS provides current QCD rules in Publication 590-B.
For eligible donors, a QCD may offer a different tax result than first taking an IRA distribution and then writing a check to the church. A QCD may also count toward required minimum distributions when the applicable requirements are met.
Because the rules are specific and can change, do not promise a tax outcome. Instead, help donors ask the right questions:
Am I eligible to make a QCD?
Does this distribution need to be sent directly from my IRA custodian to the church?
Is the church eligible to receive this type of gift?
How should I document and report the gift?
How does this gift affect my personal tax situation?
How churches can prepare for QCD gifts
Make sure your finance team knows how to receive and document an IRA gift. Establish a clear process for identifying the donor when possible, acknowledging the gift promptly, and directing it according to the donor’s instructions.
A simple year-end reminder about IRA giving can be especially helpful for members who are planning their charitable gifts and retirement distributions.
3. Gifts of Appreciated Stock or Other Securities
Donors who hold appreciated stock or other eligible securities may be able to make a gift directly to a church rather than selling the asset first and then donating cash.
In some circumstances, giving appreciated securities directly to a qualified charity can help a donor avoid recognizing capital gains on the asset while supporting the ministry. The deduction and tax treatment depend on the type of asset, how long it has been held, the recipient organization, and the donor’s circumstances. The IRS explains charitable gifts of capital gain property in Publication 526.
What churches need before accepting stock gifts
A church should not announce that it accepts stock gifts unless it has a workable process in place. Before communicating this option, determine:
Whether the church can receive securities directly
Who will coordinate with the donor or their broker
What account or custodian will receive the transfer
How gifts will be valued and acknowledged
Whether the church will immediately sell the asset after receipt
What documentation the donor may need
The simpler and more transparent the process, the more likely a donor will follow through.
Build a Clear Tax-Smart Giving Process
Tax-smart giving should never feel complicated or inaccessible. Church leaders can make a meaningful difference simply by preparing ahead.
Consider these practical next steps:
Create a non-cash gift acceptance policy
A written policy helps leaders know what gifts the church can accept and who has authority to review them. It can address cash, securities, real estate, retirement assets, donor-advised fund grants, and other complex gifts.
Provide clear donor instructions
Create a one-page resource or webpage that explains how donors can give through a DAF, IRA distribution, or stock gift. Include your church’s contact information and direct donors to seek personal tax and legal advice.
Communicate before year-end
Do not wait until the final week of December. Mention tax-smart giving options during the fall, in year-end communications, and in conversations with members who may be interested in legacy or planned giving.
Partner with qualified professionals
Church staff should not provide personal tax advice. Build relationships with trusted Christian financial planners, estate-planning attorneys, accountants, and generosity consultants who can serve as helpful resources when questions arise.
Use Every Resource Faithfully
Tax-smart giving is not about treating generosity as a transaction. It is about helping people use every available resource wisely so they can give with greater clarity, confidence, and impact.
When churches educate donors about their options, they provide practical care and make it easier for generosity to become part of a faithful, long-term stewardship journey.
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