More donors are choosing to give charitable gifts in the form of securities — such as stock, mutual funds, and other investments — instead of cash, reports The Wall Street Journal. The current strong stock market as well as benefits of efficiency and tax savings for the donor and the recipient charity seem to be driving this trend, the newspaper says.
Gerry Golub, a former managing partner of an accounting firm who plans to make thousands of dollars worth of charitable donations in the form of appreciated stock this year, explains: “It’s an opportunity for people who have done well in the stock market to count their blessings” and “help them give back” to worthy causes.
Giving a gift of appreciated stock with unrealized long-terms gains allows a donor to claim a deduction against his or her federal income taxes for the current market value of the shares. Neither the donor nor the charity owes capital-gains taxes on the profit from the shares. According to a recent analysis by Fidelity Investments, 10 million to 20 million American households could potentially save between $2.2-billion and $4.5-billion a year in taxes by donating appreciated securities, instead of giving cash directly to charities.
Kim Wright-Violich, president of Schwab Charitable Fund, a donor-advised fund, says that gifts of appreciated securities are up 76 percent, to $350-million in the first 10 months of this year, compared with a year earlier. The Vanguard Charitable Endowment Program says appreciated securities represent 69 percent of all donations so far this year, up from 46 percent last year.
Do you know how to accept appreciated stock? There are a couple of ways, one involves a stock broker and the other a paper transfer.
You must have an account set up with a broker in order to receive appreciated stock.
The donor should write a note to the foundation, stating the name and number of shares he or she wishes to donate. Then ask the donor’s broker to electronically transfer the stock to your broker’s account.
A new stock certificate in the name of your foundation with a gift letter stating that it is a gift and the name and number of stocks. A stock certificate in the donor’s name mailed in one envelope, with the gift note and signed stock power (with the signature guaranteed by a bank or broker) mailed in a separate envelope. These must be in separate envelopes for security reasons.