Four Good Reasons to Donate Stock to Charity
Giving appreciated stock you have held for more than a year is better than giving cash. If you own stocks that have appreciated since you purchased them, consider these reasons for giving stock to your favorite charity instead of cash:
- You can give more. By donating appreciated stock you have owned for more than one year, you are actually making a significantly larger gift than if you sold the stock and made a cash donation. The reason? If you donate appreciated stock directly to your favorite charity, there is no capital gains tax to pay. And you will receive a deduction for the fair-market value of the stock you donate.
- You can potentially reduce future capital gains. Many investors have stocks they want to hold for the long term because they are likely to appreciate in value. But owning appreciated stock sets the stage for owing substantial capital gains tax when you sell. If you donate some of your appreciated shares, and then buy new shares to reset your cost basis to the current price, you will reduce your future capital gains tax exposure.
- You can give your portfolio a health check. Just as your health can get out of balance, your portfolio can become unbalanced and no longer perform to its potential. Putting a charitable giving strategy in place can give your portfolio the health check it needs – and put your capital gains to work funding your philanthropy.
- You can donate stock without headaches. Some people who own appreciated stocks may think donating stock is a hassle requiring endless paperwork, phone calls and personal follow-up. In most cases, all that is required is to contact your broker to request a transfer of shares, complete a transfer form, and notify the charity that a transfer is on its way. By notifying the charity, you will ensure they accept stock donations, get their account information and brokerage numbers, and receive a receipt for your donation.
For more information about the benefits of donating stock to your favorite charity, including the Franciscan Friars of St. John the Baptist Province, contact Colleen Cushard, Co-Director, Friar Works, at ccushard@franciscan.org
Posted in: Estate Planning
