Making a donation to a favorite non-profit organization has several obvious benefits. Firstly, the satisfaction you and your family gets out of supporting an organization that gives back in your local or national community is not only satisfying, but also provides a good example for children of all ages on the importance of helping others who might be in need.
Secondly, there are financial benefits to both the recipient and you as the donor. Giving stock often results in a larger donation to the organization, as the gift is tax-deductible and there are no capital gains taxes to pay. So, if you sold the stock first and then donated the cash, you would have to pay 20% of the cash in capital gains tax (of course this only applies if the stock has appreciated in value since you bought it). For the donor, depending on the organization you donate to, and your adjusted gross income, a varying amount of your donation may be able to be deducted from your taxes.
There are options to making stock donations, such as using a Donor-Advised Fund (DAF), so it’s important to speak to an advisor who can understand your goals and help you find the solution that fits best for you. Additionally, it does take longer to coordinate a stock transfer, so you will want to plan ahead to initiate the transaction to ensure you have time to complete the transaction before the year end.
At Regent Peak Wealth Advisors, we are advocates of using stock transfer instead of cash gifts to charitable organizations in order to maximize the tax benefit of contributions. Contact us today so we might discuss these possible benefits with you and your tax professional.
DISCLAIMER: Content should not be construed as legal or tax advice. Always consult an attorney or tax regarding your specific legal or tax situation. Regent Peak Wealth Advisors, LLC is not engaged in the practice of law or accounting. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.