What’s the Best Way To Donate to a Charity?

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I want to donate to charity but I’m not sure about the most effective donation method. What’s the best way to give to charity?

If that’s a question you’ve ever wondered, you’re not alone. That’s what a listener of the Clark Howard Podcast recently asked.

What’s the Best Way To Donate to Charity?

What’s the best way to donate my money to charity? That’s what a Clark listener wanted to know on the May 15 podcast episode.

Asked Javier in Maryland: “What’s the best way to donate to a charity? I’ve typically used credit cards when donating online because I don’t feel comfortable connecting my bank account to their systems, but I know they’re charged fees when I donate this way.

“Do you have a recommendation on the best method for donating?”

We’ll get into Clark’s recommendation for donating to charity shortly. But first, don’t totally dismiss the credit card option.

“So Javier, why do all charities pretty much accept credit cards?” Clark says. “Because people are much more likely to donate if you [allow credit card donations].

“A typical charity pays 2.5% to receive that money. But when you look at what it costs a charity to fundraise, 2.5% is a low cost to them. So don’t feel guilty about using that credit card to donate to a charity.”

The Best Way To Donate to Charity? Give Stock Shares or Mutual Funds

According to Clark, the best way to donate to charity isn’t via any sort of cash.

He wants you to consider donating stock from your investment portfolio.

“If you have stocks that have grown in value, under the tax code, you get a double benefit,” Clark says. “You pay no tax on the gain of that stock from when you bought it. But the charitable donation is based on what it was worth on the day you donate.

“And so it is a crazy double benefit of the tax code, which is like a rocket booster to the deductibility of your charitable donation.”

So there you have it. The best way to donate to a charity is to provide stock or mutual fund shares that have appreciated in value. You avoid paying capital gains taxes. You get to deduct the full amount of their value. And the charity can sell the assets without paying taxes.

Most charities will be familiar with receiving stock donations, Clark says. But if the charity is tiny and isn’t set up to receive stock, you can set up a donor-advised fund. These funds are for the explicit purpose of donating to charity.


You get to receive an immediate tax benefit when you put money into the fund. Then you can earmark your investment money in a donor-advised fund for a specific organization over time. That’s true even if your charity of choice isn’t typically set up to receive stock.

Other Alternatives for Donating to Charity

Aside from the fees associated with credit card donations, you do get some healthy benefits:

  • You don’t have to share your bank account information.
  • Your credit card offers you fraud protection.
  • Credit card donations give you a clear record for tax purposes.

1. Bank Transfer

You can transfer money to a charity directly from your bank account.

Pros: Must share your bank account info.

Cons: Lower fees than credit card donations.

2. Personal Check

You can go old-school and whip out your checkbook.

Pros: No processing fees, 100% of the money goes to the charity.

Cons: Slower, risky to send via mail.

Final Thoughts

Clark loves giving to charity. And he thinks it’s a great idea for you as well, assuming you’re otherwise on track to take care of your own retirement financially.

Don’t feel guilty about donating to charity via a credit card (or any other method that involves fees), he says.


But the best way to donate is via appreciated shares of stocks or mutual funds.

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