You Made a Sizable Gift to Charity: Legal and Financial Considerations to Ensure Your Generosity Has the Greatest Impact

Making a sizable donation to a charitable organization is one of the most meaningful things you can do. Whether it’s a lump-sum gift to your alma mater, a recurring donation to a nonprofit you admire, or a contribution to a religious or humanitarian cause, charitable giving reflects your values and vision for the world.

But when large sums of money are involved—especially gifts of property, securities, or planned estate gifts—it’s important to consider the legal, financial, and tax implications to ensure your generosity goes exactly where you intend and in the most efficient way possible.

Here’s what to consider when making a significant charitable donation, how to protect your interests, and how to make sure your gift does the most good for both the cause and your financial future.

Step 1: Define What Counts as a “Sizable” Gift

There’s no fixed amount that defines a donation as “sizable,” but generally, if a gift is:

• Over $5,000 in cash or value
• Non-cash assets like real estate, artwork, stocks, or vehicles
• Part of your estate plan (e.g., a bequest or charitable trust)
• Large enough to qualify for a naming opportunity or recognition
• Expected to result in a tax deduction or reporting obligation

…then it’s worth reviewing the legal and financial details before proceeding.

Step 2: Choose a Qualified Charitable Organization

Before making a large donation, verify that the recipient is a legitimate, qualified charity.

• In the U.S., most tax-deductible charitable contributions must go to a 501(c)(3) organization, registered with the IRS.
• Use the IRS Tax Exempt Organization Search Tool to verify the nonprofit’s status: apps.irs.gov/app/eos
• Be cautious of scams, especially during disasters or crises—fraudulent “charities” can appear professional but are set up to steal donations.

Also, review the charity’s mission, financials, and reputation. Sites like Charity Navigator, GuideStar, and BBB Wise Giving Alliance can help you assess how efficiently and transparently the organization operates.

Step 3: Understand the Tax Implications of Your Gift

One of the biggest reasons donors consult professionals when giving large amounts is to optimize tax benefits. Here are key considerations:

A. Cash Donations

• May be deductible up to 60% of your adjusted gross income (AGI) for the tax year.
• Must be documented with a receipt or bank record for any donation over $250.

B. Appreciated Securities

• Donating stock, mutual funds, or other securities that have increased in value can offer double benefits:
  • Avoid paying capital gains taxes
  • Deduct the full fair market value of the asset

C. Real Estate or Personal Property

• Donating property may allow you to deduct its appraised fair market value
• May require a qualified appraisal and IRS Form 8283
• Must align with the charity’s mission if you want to deduct full value (e.g., donating artwork to a museum)

D. Qualified Charitable Distributions (QCDs)

• Individuals age 70½ or older can donate up to $100,000 per year directly from an IRA to a qualified charity
• Counts toward required minimum distributions (RMDs) and is not taxed as income

Because tax rules vary based on income, the type of donation, and the receiving organization, it’s best to work with a CPA, financial advisor, or estate attorney before finalizing large gifts.




Step 4: Get the Right Documentation

To claim a tax deduction or protect yourself legally, you need to document your donation properly.

For gifts over $250:

• Request a written acknowledgment from the charity stating:
  • The amount or description of the gift
  • Whether you received anything in return (e.g., a dinner, merchandise)
  • A statement that the gift is tax-deductible

For non-cash gifts over $5,000:

• You must obtain a qualified appraisal
• File IRS Form 8283 with your tax return
• The charity must complete a section acknowledging receipt

Keep copies of:

• Checks or transaction records
• Appraisal documents
• IRS forms and correspondence
• Written agreements or pledge letters




Step 5: Consider Establishing a Charitable Vehicle

If you want to give more strategically or over time, consider setting up a charitable giving vehicle:

A. Donor-Advised Fund (DAF)

• A simple way to donate assets, receive a tax deduction now, and recommend grants to charities over time.
• Easy to set up through financial institutions or foundations.
• Popular for individuals who want to spread giving over years.

B. Charitable Trust

• Tools like Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs) allow you to:
  • Donate assets
  • Generate income for yourself or heirs
  • Eventually benefit the charity

C. Private Foundation

• Offers total control over how funds are distributed.
• More complex and expensive to operate, typically for donors giving millions of dollars.

These options can maximize your impact, reduce tax burdens, and involve your family in ongoing philanthropy.




Step 6: Clarify Recognition, Restrictions, and Intent

If your donation comes with conditions or expectations, such as naming rights, endowment use, or scholarship designations, make sure everything is spelled out in a written agreement.

Discuss:

• How your gift will be used
• Whether it will be restricted to a specific program
• Whether it should be invested as part of the organization’s endowment
• If your name or your family’s name will appear on any materials or property

If there’s a dispute in the future or the organization changes direction, your written agreement may protect your intent.




Step 7: Plan for Charitable Giving in Your Estate

If you’re including a gift to charity in your will, trust, or estate plan, work with an estate planning attorney to:

• Specify which organizations you want to support
• Clarify the amount or asset type being donated
• Ensure the language in your will is legally binding and enforceable
• Update your plan as your financial situation or charitable interests change

Estate gifts can reduce or eliminate estate taxes and leave a lasting legacy aligned with your values.




Step 8: Protect Yourself from Legal Risk

While rare, large charitable donations can sometimes lead to legal or financial complications. Common pitfalls include:

• Donating to unregistered or fraudulent organizations
• Claiming excessive or unverified tax deductions
• Giving appreciated property without proper valuation
• Entering into vague or undocumented gift agreements

Avoid these issues by:

• Working with reputable professionals
• Keeping detailed records
• Asking questions before signing anything
• Never rushing into a large donation without due diligence




Final Thoughts

Charitable giving is an act of generosity—but it also comes with legal and financial dimensions that deserve careful consideration. When done thoughtfully, your gift can support a cause you care about, reduce your tax burden, and create a lasting impact for years or even generations.

By verifying the organization, documenting your gift, understanding tax implications, and possibly using a giving vehicle or estate strategy, you ensure that your generosity is both meaningful and effective.

Give with your heart—but plan with your head.




Don’t Be Afraid To Get Help

If you’re facing legal questions, safety concerns, or emotional turmoil due to any of the situations described above—especially domestic abuse—don’t try to handle it alone. Professional guidance can make all the difference in ensuring your rights are protected and your next steps are clear. Whether you need legal advice, help with documentation, or assistance navigating local resources, speaking to an expert can bring peace of mind. Click here to get connected with professional support tailored to your situation.