By: Trish Adkins
Typically, when you think about making a donation to charity, writing a check, using a credit card or donating cash are the first type of donations that come to mind. However for the savvy donor and investor, making a charitable stock donation is an efficient way to make a meaningful and sustaining gift to your charity of choice. Plus, charitable stock donations can benefit you as well as the charity.
John Sion, Principal at Sage Financial Group, shared the ins and outs of donating stock to charity.
Here are five things you should know about making a charitable stock donation.
1. Your stock donation can go further than your cash.
You can have more impact on causes that are important to you by giving appreciated stock. For example, if you originally bought stock for $500 and then stock has appreciated to $550, the cost of your donation is $500 but the value to the charity is $550. Your original cash investment has grown, and the charity receives the full value of that growth.
2. Donors can receive a charitable deduction without realizing capital gains.
As the donor, you receive a charitable deduction equal to the current market value of the stock, without having to sell the stock and realize capital gains.
“In other words, if someone has a stock that they paid $1,000 for and is now worth $10,000 and they sell this stock; they have to pay taxes on the $9,000 appreciation. By donating the stock to a charity, they can take the full $10,000 charitable deduction and they’ve permanently removed the $9,000 of embedded tax liability,” says John.
3. You can donate other highly appreciated securities, too.
Stocks are not the only investment you can donate. Any highly appreciated asset, including mutual funds or other types of investments can be donated.
4. Anyone can donate stocks.
Donating stocks and assets is not just for those in highest income categories. As long as you’ve held your asset for more than one year and it has increased in value, you can make a stock donation.
5. The process is easy.
If stocks are held in a brokerage account, this is a very easy process. At your direction, your stockbroker will transfer the stocks into your charity of choice’s brokerage account. From there, the charity can choose to sell and use the proceeds immediately or hold onto your stock donation.
Stock Donations Can Help Kids with Cancer
Making a stock donation to Alex’s Lemonade Stand Foundation (ALSF) is an impactful way to help fund innovative, breakthrough childhood cancer research; while also providing immediate support to families in the midst of a childhood cancer diagnosis. ALSF has funded more than 1,000 research grants at nearly 150 institutions and also supporting families traveling to treatment.