By Dynamic’s Asset Management Team
Download the 12.05.25 Dynamic Portfolio Perspectives for advisors’ use with clients
Charitable giving shouldn’t live outside the financial plan. Discover how to align philanthropy, tax strategy and portfolio balance for greater impact.
For many clients, charitable giving begins as a deeply personal decision. It’s driven by family history, community ties, faith, education or the desire to leave something meaningful behind. But too often, philanthropy lives outside the core financial plan. Instead, it’s handled at year-end, funded with leftover cash and disconnected from the broader portfolio strategy.
That separation is a missed opportunity.
When charitable giving is intentionally integrated into a balanced wealth plan, it can become one of the most powerful tools available to clients — not only for creating impact, but also for managing taxes, diversifying concentrated positions and shaping long-term legacy goals.
Today, the conversation is no longer about whether clients should give. It’s about how they give and whether they’re doing so in the most efficient way possible.
The Hidden Cost of Giving Only Cash
Many investors still default to writing checks or using a credit card when making donations. It’s familiar. It’s easy. And it feels straightforward. But for clients who have spent years building wealth in the market, this habit often creates unnecessary tax friction.
Most seasoned investors hold long-term appreciated assets, such as stocks, ETFs, mutual funds and other securities that have grown significantly over time. When those assets are donated directly to a qualified charity after being held for more than a year, the outcome changes dramatically. The donor can often avoid long-term capital gains taxes entirely while still receiving a charitable deduction based on the asset’s full market value. Meanwhile, the charity receives the complete benefit of the gift.
But that benefit is frequently missed. According to Fidelity Charitable, while 80% of charitable donors have appreciated assets, only 20% contributed this type of asset to a charity.
Most commonly, donors sell their investment, pay the capital gains tax and then donate the remaining cash. In that scenario, taxes quietly reduce both the donor’s planning flexibility and the charity’s ultimate benefit. The difference between these two paths can be substantial, especially for highly appreciated, long-held positions.
Turning Philanthropy into a Strategy, Not a Transaction
Modern charitable planning has evolved beyond one-time gifts. Today, many families are embracing donor-advised funds as a central hub for long-term philanthropy.
Conceptually, a donor-advised fund operates much like other planning accounts clients already understand. When donors make an irrevocable contribution to a public charity that sponsors a donor-advised fund program, they are eligible for an immediate tax deduction, regardless of the asset. Donors can advise on an investment strategy for the charitable funds — and those charitable dollars grow tax free.
What makes this structure so compelling is the separation it creates between the tax decision and the giving decision. A client can fund a donor-advised account during a high-income year, a liquidity event, or a business sale, capturing the full deduction when it’s most valuable, while pacing actual charitable grants over many years.
For clients, this introduces clarity and control. After contributing to their donor-advised fund, they have a ready reserve of funds dedicated to charitable giving. For advisors, it unlocks a strategic planning lever that can coordinate tax efficiency, portfolio construction and philanthropic intent within a single framework.
The Advisor’s Expanding Role in Charitable Strategy
As charitable planning becomes more sophisticated, the advisor’s role should evolve. No longer is philanthropy simply a referral to a third party or a seasonal tax discussion. Instead, it becomes part of the core advisory relationship.
Advisors are instrumental in client education. According to Fidelity Charitable, 50% of donors have had a specific charitable planning conversation with an advisor. And half of those donors said the discussion helped them make decisions about what or how much to contribute to charity.
These conversations often deepen trust. They move the relationship beyond returns and risk metrics into purpose and legacy. When clients understand that generosity can be optimized, without reducing their financial security, the dynamic around giving shifts. It becomes intentional, repeatable and strategic.
Why Charitable Planning Belongs Inside the Portfolio
From a portfolio perspective, thoughtful giving can serve several important functions. It can help reduce concentration risk by allowing clients to donate in-kind rather than sell large positions. It can improve tax efficiency over time by minimizing capital gains exposure.
Rather than viewing philanthropy as something that happens outside the plan, more families are choosing to embed it directly into their long-term financial architecture.
A Meaningful Definition of a ‘Balanced’ Portfolio
A truly balanced portfolio doesn’t only account for growth, income and risk. It can also reflect the client’s values, their desired impact and the story they want their wealth to tell.
Charitable giving, when structured thoughtfully, allows clients to express those values with clarity and efficiency. It transforms generosity from a year-end obligation into a lasting part of their financial strategy.
As advisors, helping clients give well may be one of the most enduring contributions we can make to their financial lives. Because in the end, wealth isn’t just about what is accumulated. It’s also about what is shared.
Invest with intention.
At Dynamic, we can help you provide proactive guidance for your clients on charitable giving. Let’s talk about how we can support your clients’ success.
Contact Dynamic’s Asset Management team at (877) 257-3840, ext. 4 or assetmanagement@dynamicadvisorsolutions.com.
Disclosures
For advisor use only. This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.
This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.
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