There’s a quiet pattern that shows up in a lot of financial reviews. A client opens her statements, sees a healthy balance, and then mentions, almost in passing, that she gave $40,000 to charity last year. Maybe more. Some of it went to the alma mater, some to the church, some to the hospital that took care of her father, and a few hundred dollars here and there to causes that crossed her path.
She’s proud of the giving. She also can’t quite remember where all of it went, or whether any of it was deductible in a way that helped her. And when asked whether she has a plan for the next ten years of giving, she pauses.
This is the middle of the charitable giving spectrum. It’s a large group, and it’s the group most often overlooked in conversations about philanthropy.
The middle segment is bigger than people realize
Most coverage of charitable giving focuses on either end of the spectrum. At one end are families giving away seven or eight figures a year, often through private foundations, with staff and grant applications and named buildings. At the other end are everyday donors writing $50 checks at the holidays.
The middle is wider than both. It includes households giving roughly $10,000 to $100,000 per year, sometimes more during a high-income year or after a liquidity event. Recent research from GiveTeam estimates these donors collectively move significant dollars but receive almost no tailored guidance, because most philanthropic advisory firms are built for the top of the market and most online tools are built for the bottom.
If you’re in this group, you probably recognize the experience. You give generously. You care about the organizations you support. And you’ve never had a real conversation with anyone, your CPA, your advisor, your friends, about whether the way you’re giving actually serves what you want it to.
Why “reactive giving” is so common (and what it costs you)
Reactive giving means responding to requests as they come in. A friend runs a marathon. A school sends a fundraising letter. A natural disaster makes the news. Each individual gift makes sense. Added up across a year, the total can be substantial. And the strategy, if you can call it that, is whoever asked.
Three things tend to happen when giving is reactive rather than planned:
The first is mild guilt. Many donors in this segment describe a low-grade feeling that they should be doing more, or doing it better, or being more thoughtful about it. The feeling rarely goes away on its own.
The second is missed tax efficiency. Writing a check from a checking account is the least tax-efficient way to give. Donating appreciated stock or other assets you’ve held for more than a year often allows you to give the same dollar amount while reducing your tax bill by more than the value of a cash gift. For donors in higher brackets, the difference can be meaningful, and it compounds across years.
The third is a quiet drift away from what you actually care about. When all giving is responsive, the causes that get funded are the ones with the loudest fundraising operations. That’s not the same as the causes most aligned with your values.
What a plan actually looks like at this level
A useful charitable plan at this giving level doesn’t require a foundation, a board, or a separate office. It requires three things.
A short statement of what you actually want to support. Not a mission statement in the corporate sense. Two or three sentences that name the causes, populations, or geographies you care about most. This becomes the filter that future requests pass through. It also makes the “no” to misaligned requests much easier to deliver.
A budget you’ve decided in advance. A common reframe that resonates with clients in or near retirement is to think about giving as a percentage of investable assets rather than a percentage of income. One percent of liquid net worth per year is a useful starting point for the conversation. Sometimes it’s the right number, sometimes it’s too high or too low, but it gives you a real anchor instead of a moving target.
A vehicle that matches your timeline. For many donors in the middle segment, a donor-advised fund is the right tool. It lets you fund the account in a high-income year (capturing the deduction when it’s most valuable), invest the balance, and grant out over time as you decide what you want to support. For donors who are giving consistently from year to year and don’t need to bunch deductions, a simpler approach may serve better. The vehicle should follow the strategy, not the other way around.
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Choosing the right vehicle: DAFs and QCDs
The two most tax-efficient vehicles for middle-segment donors are donor-advised funds and qualified charitable distributions. Which one fits depends on where your giving comes from and what stage you’re in.
Donor-advised funds work well when you’re giving from taxable accounts. You contribute appreciated stock or other appreciated assets, capture the full fair market value deduction, avoid capital gains tax, and then grant the funds out to charities over time. For donors in higher tax brackets, especially those with concentrated stock positions or irregular income, a DAF can turn a reactive, cash-based giving pattern into a strategic one. The risk worth naming directly: money goes in, the deduction is taken, and then the funds sit. If you have a DAF, the most useful question is whether you’ve decided how long you intend the balance to last, and whether your current granting pace matches that intent.
Qualified charitable distributions work when you’re 70½ or older with pre-tax IRAs. You can send up to $105,000 per year directly from your IRA to charity. The distribution counts toward your required minimum distribution but doesn’t add to your taxable income. For retirees who don’t need their full RMD for living expenses and are already giving to charity, QCDs are often more tax-efficient than withdrawing the money, paying tax on it, and then donating cash. The limitation: the charity must receive the funds directly from the IRA custodian, and donor-advised funds don’t qualify as recipients.
What this looks like at Thistle Wealth
For clients who give meaningfully but don’t think of themselves as “philanthropists,” charitable planning is part of the broader retirement conversation, not a separate track. We look at:
- How much you’re currently giving and how that compares to what you’d like to be giving
- Whether you’re using the most tax-efficient assets to fund those gifts
- Whether the vehicle you’re using (or not using) fits your timeline and your tax situation
- How giving fits alongside Social Security timing, withdrawal strategy, and income planning in retirement
- For clients who want it, a referral to a philanthropic advisor who can help you build out the strategy and identify organizations aligned with what you care about
We don’t recommend specific charities. That’s not our role, and the firms that do it well are specialists. What we do is make sure the financial plan supports the giving you want to do, and that the giving you’re already doing is structured well.
The goal is the same one that runs through everything we do: clarity about what’s happening with your money, and confidence that the way it’s being used reflects what you actually want.
If you’d like to talk through what charitable giving looks like in the context of your retirement plan, whether you’ve been giving for years or are just starting to think about it more intentionally, you can schedule a conversation here. There’s no cost for the initial conversation, and no expectation beyond seeing whether we’re the right fit for what you’re working through.
This article is for general educational purposes only and is not personalized financial, tax, legal, or investment advice. Your situation is unique and may call for different strategies than those described here. Please consult with a qualified professional who can provide guidance tailored to your specific circumstances. All investing involves risk, including potential loss of principal.
