Elder Services has always gratefully accepted gifts of appreciated stock and recently one of our donors connected us to DonateStock, an online platform that makes donating stock easier than ever. Click here to check out our profile page on DonateStock, an internet platform that makes it easy for everyday investors to donate stock in just minutes.
Our donors are becoming increasingly intentional in their philanthropic giving, often planning ahead to increase the size and impact of their gifts. Across non-profits nationwide, 2024 was an extraordinary year for charitable stock gifting. And, as the stock market continues to yield gains, more donors are leaning into tax-advantaged gifts of appreciated stocks, ETFs and mutual funds.
Donating appreciated stock may not be the first option you think of when you think about donating to support Elder Services, but doing this can result in several tangible, real-world benefits—both for you and for Elder Services. With this in mind, here are four of the best and most surprising benefits of donating stock.
- Deduct the fair market value of the stock
When you donate stock you’ve held for one year or more to charity, the IRS allows you to deduct the fair market value of the charitable stock donation. In most cases, taxpayers can deduct up to 30% of adjusted gross income by donating appreciated stock and other non-cash assets, assuming a holding period of at least one year.
- Avoid Capital Gains Tax
When you donate stock to charity that has been held for more than one year, the IRS also allows you to avoid the capital gains tax on the stock gift. This, combined with the deduction described above underscore the unmatched benefits of donating appreciated stock to charity.
- Rebalance to Reduce Future Capital Gains
If you have big gains in a particular stock but are not ready to part with it, you can take advantage of a tactic called rebalancing in which you donate shares with the lowest cost basis and repurchase the same number of shares at current market prices. This enables you to avoid capital gains tax on the stock you donate to charity while increasing or stepping-up the cost basis of the shares you now own. This will reduce capital gains tax when you sell the stock in the future.
For example if you own 100 shares of Apple that you purchased in 2011 at $15, you can donate those shares (now worth $150 per share or $15,000) and avoid the tax on the $13,500 capital gain. You can then repurchase 100 shares of Apple for $150 each, thereby increasing your cost basis and reducing your future tax liability.
- You can give more if you donate stock (rather than sell it)
When some think about donating stock to charity, they may think first about selling the stock and donating the proceeds from the sale to charity. Even though the intent is to transfer the value of the stock directly to charity, the donor is still liable for the capital gains tax when the stock is sold vs. gifted.
By donating stock as a pre-tax gift, you are letting the Elder Services keep the proceeds that would have otherwise been paid to the IRS—had you sold the stock.
Also worth noting: as government grant funding faces potential cuts, individual donors will play an increasingly vital role in supporting crucial nonprofit missions. This shift makes the efficiency and tax advantages of stock gifting more important than ever.
*Disclaimer: Elder Services is not a tax advisor and the above does not constitute financial advice. Please consult a certified tax professional for guidance.