Giving stock or other securities to a beloved nonprofit is a wonderful experience and it’s good for your tax bottom line. Unfortunately, it’s not often done. According to an article on Forbes.com (https://www.forbes.com/advisor/investing/donate-stock/ ), “donating stock is an underutilized practice.”
Why, you ask. Because donors like you don’t know they can. Only half of the respondents in a study conducted by Fidelity Charitable knew that they could even donate stock. Fewer than one in five have actually done it.
The benefit to you, dear donor, is the impact on your income tax bill. When you, the investor, sell stock from your portfolio and make a profit, your tax bill increases. Donating appreciated stock to a nonprofit means you pay no capital gains tax!
This same Forbes.com article quotes Kelly Elsensohn, a wealth advisor and CPA at WealthSource, “By the time you sell the stock and pay the taxes, you’re losing 25% to 35% of the value.” On the other hand, the tax deduction limit for gifting stock to a public charity is up to 30% of your adjusted gross income, though you can carry any excess over for up to five years.
Benefits to the donor:
The nonprofit benefits because they receive a larger donation.
Now that our donor knows they can donate larger gifts to you through stock donations are you ready to accept them? Does your website let viewers know that you can accept this type of donation?
Do you have a brokerage account? Simply put, a brokerage account is a special type of account used to buy and sell securities. A licensed brokerage firm or maybe even your bank can create this account for you. You can also use financial services companies like Fidelity, Charles Schwab, TIAA, UBS, and Edward Jones. The new kid on the block is DonateStock, a third-party service company that handles these transaction between the donor and the nonprofit.
Lastly, in a recent article written by Michael Theis for the Chronicle of Philanthropy, 2021 was a good year for stockholders as major market indices have seen big gains. This is good news for fundraisers because charitable giving rates are strongly linked to annual stock market performance.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.