Tumultuous times like today’s COVID-19 pandemic tend to bring out the best in us, and you don’t have to look far to find examples: Canned food drives for local food banks, a surge in blood donation, and otherwise idled restaurants providing donated meals for healthcare workers.

Normally the Tuesday after Thanksgiving, #GivingTuesday has leapt forward this year to May 5th in response to the pandemic and its sudden impact on millions. 

There’s no lack of need, more so given the health crisis facing everyone in the world. If you can please give, however small the gesture. 

What I’ve learned as a financial advisor is that people of means often feel like they should give more but wonder about the implications to their overall investments.

For instance, they might need to sell stock to raise cash for a charitable gift. Sometimes that’s highly appreciated stock that will be taxed on a significant capital gain built over decades.

Don’t let fear freeze you into putting off a gift you really want to make. Thankfully, there are several ways to control your investment-driven giving and perhaps even increase your total gift over time while minimizing taxes. 

First, consider giving away stock rather than cash. Why? Because charities are tax-exempt. You might be on the hook for capital gains taxes. If you give away highly appreciated stock instead the charity can sell it and realize no taxable gain.

Most charities are very familiar with this process and can provide guidance on how to report the gift. It’s always best to involve your tax adviser, of course. It’s also prudent to talk with a financial planner about exactly which stocks to gift.

For instance, you might have a portfolio that’s heavy with one specific stock, increasing your concentration risk. If you can’t easily diversify with an index fund, reducing your exposure to a single, highly appreciated stock can be a prudent move.

You don’t have to be sitting on a pile of stocks to give money away today, points out Christie Whitney, our own certified financial planner at Rebalance

If you’re taking required minimum distributions (RMDs) and don’t need the cash (or the tax bill that comes with it), you can give it away instead, she says. “In a typical year, RMDs taken and given to charity are tax exempt,” Whitney explains.

If you want to give but can’t decide which charities to support, there’s always the option of starting a donor-advised fund (DAF). The big brokerages, including Vanguard, Fidelity and Schwab, can help you set one up.

Foundation ‘lite’

A donor-advised fund is best thought of as “foundation lite.” You get a lot of the tax benefits and control of a foundation without the associated costs of creating and managing it day-to-day. You can even call your fund the “Joe and Janet Smith Foundation” if you like.

Going the DAF route is best for people who face an unusually large tax bill because of a windfall, such as the sale of a business or a bonus. If you can’t defer the income and feel charitably inclined, creating and funding a donor-advised fund can give you a big tax break now. 

You can choose to give the money away over the ensuing years. That means your fund can grow with the market as you make gifts, increasing your impact over time.

Ultimately, if you have the means today, try to give both big and small. Even a modest cash gift to a shelter, to a food bank, or to food delivery for shut-ins has an immediate impact.

But don’t stop there, especially if you have financial planning decisions to make this year. A little creativity and a timely consultation could open the door to a far more generous you, well after Giving Tuesday has come and gone.

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