Otherwise, you may end up using questionable giving vehicles.

The great thing about Americans is that they’re very generous. One of the drawbacks of Americans is that they tend to procrastinate. It should come as no surprise that one-third of annual giving occurs in December, with 10% of all giving taking place during the last three days of the year, according to Nonprofits Source.

That’s fine for small donations made by credit card or personal check. But what about more complex gifts? This is the time of year when I receive numerous calls and emails from advisors seeking a charitable solution to a wealthy client’s tax problem. A two-minute drill may be exciting on the football field. I don’t recommend it for charitable planning unless you want to see lots of Internal Revenue Service penalty flags thrown your way and clients sacked for significant losses.

Take your time to get your game plan in order, even if it means pushing off charitable planning until next year. Nothing gets coaches and advisors more frustrated than false starts and illegal procedure penalties when the clock is winding down.

OBBBA

The One Big Beautiful Bill Act made charitable giving a little less attractive for affluent donors starting in 2026, and that’s adding to the usual year-end crush. Here are two of the most important changes:

1. New floor for itemizers: For individuals who itemize, deductions for charitable contributions are only allowed for the amount that exceeds 0.5% of their adjusted gross income (AGI), starting in 2026. This might disincentivize smaller, consistent donations and could lead to a strategy of “bunching” multiple years of donations into a single year to meet the threshold.

2. Limits for high-income earners: For taxpayers in the top marginal tax bracket (37%), the value of their charitable deduction is capped at a 35% tax benefit. This effectively raises the after-tax cost of giving for the wealthiest individuals as they lose about 5% (2/37) of their previous deduction.

So, in the rush to beat year-end deadlines, I’ve seen some really questionable tax shelters and other charitable giving schemes attract more interest than you’d expect from well-off donors and their advisors. Perhaps you’ve been contacted about structures that promise to give your clients a $5 write-off for every dollar they put in.

Questionable Giving Vehicles

Here are some examples:

Charitable limited liability companies (LLCs). These allow taxpayers to transfer cash or other assets into an LLC and then “donate” a majority percentage of non-voting, non-managing membership units to a charity. The taxpayer, however, keeps the voting/managing units and thus maintains control over the assets. The individual may continue to access the cash or marketable securities for personal use by “borrowing” a note after the “donation.” The scheme may include an “exit strategy” in which the taxpayer can buy back the donated interest at a significantly discounted price after a specified period of time. Meanwhile, the charity has no real control or influence over the LLC or its assets, despite being the majority owner on paper.

Syndicated conservation easements. These are another scheme that pulls people in, particularly in the final months of the calendar year. Here, investors acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal when the partnership donates a conservation easement on the land. The deduction amount is often based on an inflated appraisal that doesn’t reflect the actual fair market value (FMV) of the property interest donated. Promoters are heavily involved, often providing the “appraisal” and creating the entities required for the listed transactions.

Bulk purchase donations. The promoters buy software, personal medical devices or other badly needed pricey items for charities in bulk (that is, at wholesale prices) and then allow donors to take their deduction at full FMV.

Promoters will tell you the structures are legal – you contribute, say, $25,000, and you get a $125,000 charitable deduction. But when the IRS puts these structures under its microscope, they’ll be challenged. As the old saying goes, “If it sounds too good to be true, it probably is.” One of the first tests the IRS applies to a structure is that there must be a non-tax reason for doing it. Usually, there isn’t one. If the non-tax reason is: “I wanted to give money away to charity.” Well, why didn’t you just give your dollar directly to the charitable organization? Why go through an intermediary?

Even so, unless a client takes their tax savings and reinvests the proceeds, it’s ultimately an economic loss. All they’ve really done is given themselves more money to spend. They haven’t created any rate of return, because there’s no potential upside to the “investment.” You don’t get anything back five years from now.

You really need six months to a year to do charitable planning correctly if significant assets are involved. Sometimes, a charitable gift requires writing a life insurance policy to replace the gift your client is giving. That alone requires the lead time needed for underwriting and possible trust structures.

Real World Example

I remember the first significant charitable remainder trust I did early in my career. It was for $1.5 million—a big deal for me at the time. It was a cold New Year’s Eve. I had to drive all the way from suburban Chicago to the downtown Merrill Lynch lobby. I spent hours waiting around for my client’s broker to open the client’s brokerage account and transfer funds to his charitable trust account before the market closed for the year. If the transaction didn’t go through, my client wouldn’t have received any tax deduction for the year, and I probably wouldn’t have gotten paid. My job essentially was to babysit my client’s broker, and I told myself, “I’m never doing this again.” But sure enough, as we enter the final months of the year, the crazy requests start coming in like clockwork.
With the pressure on and the clock winding down, you don’t want the charitable planning ball in an inexperienced quarterback’s hand. Mistakes and incompletions are costly and can take years to rectify. When it comes to your client’s charitable planning, take the time to do it right—even if it means delaying until next year.