If the value of the stock you wish to donate is higher today than when you purchased it, and/or you have owned the stock for 12 months or longer you may:
- Receive a charitable deduction* for federal income tax purposes based on the full fair market value of the stock on the date of the gift.
- Avoid paying capital gains tax on the increase in value of the stock, further reducing the after-tax cost of your gift, or allowing you to make a larger gift than you could with cash for the same after-tax cost.
- Use the cash you would have otherwise donated to diversify your investments, to repurchase investments at a higher cost basis or for other purposes.
However, if the value of the stock you wish to donate is less than what you originally paid for it, another option is to sell the stock yourself and donate the cash proceeds.
Here’s an example:
Bob purchased 50 shares of XYZ Corp. common stock in 2001 at a cost of $1,000. Over time, this stock appreciated and is now worth $10,000. Bob is in the 33% federal income tax bracket and 15% long-term capital gains tax bracket. Bob wants to make a gift of $10,000 to Chicago Architecture Foundation.
Give $10,000 in Cash
Sell Securities and Give Proceeds
Give Securities Outright
Gift Value to CAF
Amount of Charitable Deduction*
Federal Income Tax Savings (33% tax rate)
Capital Gains Tax Saved or (Paid at 15% tax rate)
Total Tax Savings
After Tax Cost of $10,000 Gift
*The amount of charitable deduction you can claim in any one year is limited to 50% of your adjusted gross income for gifts of cash and 30% of your adjusted gross income for gifts of long-term capital gain property. Excess deductions can be carried forward for up to five years.
If you have questions about gifts of stock, please contact Michelle DeMent, Planned and Major Gifts Officer, at 312.561.2115 or firstname.lastname@example.org.
The purpose of this webpage is to provide general information that we hope will be helpful to you in your tax, estate and charitable planning. It is not intended as legal, accounting, tax or other professional advice and should not be relied upon as such. For advice or assistance with your particular situation, please consult your attorney, tax advisor, financial advisor or other professional.
IRS CIRCULAR 230 NOTICE: To the extent that this information concerns tax matters, it is not intended to be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.