Stock Donations Offer Multiple Benefits to Donors and Charities
What if there was a way to increase your donation’s impact, a strategy that would yield a more significant benefit for both the charity and you? Well, there is: donating stock. Stock donations to charity provide advantages that make it a tax-smart way to give, yet many people don’t consider it an option for charitable giving.
According to a 2016 study, 80 percent of donors own appreciated assets, such as stocks, mutual funds, or bonds, but only 21 percent of those donors have contributed these types of assets to charity.
Although appreciated non-cash assets often are the most tax-smart charitable gifts, not all charities have the capabilities to accept these gifts. A donor-advised fund (DAF) at TrustBridge Global Foundation is a charitable organization with the resources and expertise to evaluate, receive, process, and liquidate assets.
Non-Cash Assets Maximize Your Philanthropic Impact
It Can Increase Your Donation
If you donate stock that has appreciated for more than a year, your gift will be 20 percent more than if you sold the stock and then made a cash donation. Why? By donating stock, you avoid capital gains taxes.
In the US, the maximum federal capital gains tax rate is 20 percent on long-term holdings. If you are likely to realize a taxable profit on the sale of assets you purchased in the past five years but donate the stock directly to a charity, there’s no capital gains tax to pay. Plus, you are still eligible to deduct the full fair-market value of the asset you donated from your income taxes, up to the overall amount allowed by the IRS.
It’s an Easy Process
If you’re worried that donating stock will be complicated and time-consuming, you don’t have to be. TrustBridge Global simplifies the process.
A donor-advised fund is like a charitable investment account that can be used exclusively to support charities. Instead of donating multiple stock blocks to numerous charities, you make one donation used to fund your TrustBridge account. There is one form to file with your tax return instead of many.
And if you’re not sure which charity should receive your appreciated stock, you don’t have to decide immediately. Donating stock to a donor-advised fund allows you to deduct the current tax year and then support as many charities as you would like over time by recommending grants on the timetable that makes the most sense to you.
Donating stock removes tax liability from your portfolio
Having a highly appreciated position in a portfolio is wonderful until the investor is ready to sell that position. The long-term capital gains tax rate can be 20 percent (or more with state income taxes), depending on your taxable income and filing status.
Donating that highly-appreciated stock to charity removes that liability entirely, enabling you to make your desired donation, deduct the value of the grant from your adjusted gross income, and not have to worry about the capital gains tax you would otherwise have had to pay if you had sold the stock.
A TrustBridge Global Donor Advised Fund enables you, as the investor, to move appreciated stock into the fund without any tax penalty and then decide how to donate assets in the fund to charitable organizations.
It’s a better way to use your cash
Donating stock from a portfolio, then depositing into the portfolio an amount of cash equal to the value of the stocks gifted can set you up for future tax-saving opportunities.
For example, you could use the deposited cash to purchase stocks that allow the portfolio to maintain your chosen market exposure but have a higher cost basis than the gifted shares. This higher-basis investment increases the eventual tax-loss harvesting potential, which should help reduce future tax payments.
Your non-cash gift can have a tremendous impact on the causes important to you. TrustBridge Global can help you understand the process of stock donations to ensure you and your selected charity receive all the benefits. As part of a global network of DAF providers, TrustBridge Global can ensure that funds are mobilized to where they are needed most. The streamlined process makes it easy for you to donate stock to make the world a better place.