Can I Donate Stock to Charity?

It’s important to confirm with the charity that they can receive the specific how to accept stock donations type of stock you’re donating. Here’s a hypothetical example of the difference across tax benefits and total donation amounts between stock and cash gifts. Stocks issued recently are typically held digitally in a brokerage account.

Getting started accepting stock online with Cocatalyst

• That means you’ll want to keep an eye out for new programs being established and existing matching gift companies expanding their eligibility criteria.
• See How To Figure Your Deduction When Limits Apply and Carryovers, later, for more information about ordering and carryovers.
• Let’s take a closer look at how it works, starting with the tax benefits.
• A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than an SEP or SIMPLE IRA, to certain qualified organizations.
• Some charities like GiveDirectly have this information on their websites, while you may need to contact others.
• In addition to providing donors with another option to give, there are huge perks for donors who give nonprofit stock donations.

Assume you invested $1,000 in Apple five years ago and today your stock is worth approximately $5,000. If you sold the stock, you would have to pay capital gains tax on the $4,000 gain. With current capital gains retained earnings tax rates at 15 to 30 percent (depending on your income and where you live), that means you would owe between $600 and $1,200 to the IRS.

Top Fundraising Resources

If you’re interested in donating stock, first confirm with the charity of your choice that they are able to accept the donation. Many organizations, including GiveDirectly, are able to accept donations made via stock. You may also need to create an investment policy if you only want to take specific stock donations. You should also think about whether you want to sell all stock as soon as you receive it or hold onto it.

Stock Donations: 7 Essentials To Maximize Charitable Giving And Your Tax Deduction

• Its benefits have been hard to understand, and nonprofits often don’t know how to help donors through the process.
• If you don’t have a bank account, go to IRS.gov/DirectDeposit for more information on where to find a bank or credit union that can open an account online.
• The contributions must be made to a qualified organization and not set aside for use by a specific person.
• So now, instead of having $3000 available to donate, if I’m in a 20% tax bracket, I only have $2250 available.
• Please contact a member of the Hawkins Ash CPAs nonprofit team if you have any questions or need assistance regarding stock donations.
• When you hold stocks in a taxable account, any increase in value above your original cost basis is subject to capital gains taxes.

Organizations typically send written acknowledgements to donors no later than January 31 of Accounting Security the year following the donation. For the written acknowledgement to be considered contemporaneous with the contribution it must meet both of the following requirements. If the acknowledgment doesn’t show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution.

Fractional Interest in Tangible Personal Property

• Capital assets include most items of property you own and use for personal purposes or investment.
• “This accomplishes two things—you’re increasing your itemized deduction and you avoid the tax because you’re donating the stock to charity,” says Elsensohn.
• Unless the conservation contribution meets an exception, it will be disallowed.
• Because you keep an interest in the property, you can’t deduct the contribution.
• Private stock can also be donated and often bring higher values, although the process involves a few extra steps.
• That’s when you need bylaws that are clear and unambiguous, so your questions on how to proceed are already answered.

As you promote your stock giving option in marketing and conversations, direct donors and prospects straight to your new stock giving page. Here, they’ll input their information and begin the transaction process. Note that while dedicated stock giving tools aren’t required to improve your stock fundraising process, they help immensely on multiple fronts—donor experience, data collection, logistics, and more. If you don’t invest in an improved stock giving tool, you can still follow these steps to create a more intentional fundraising process. Platforms like FreeWill make it easy to address all the concerns discussed above. You can create a lead-capture page for stock donors, steward your relationships with ease, and automate form and receipt delivery.