DONATING FINANCIAL SECURITIES
INCREASE YOUR TAX SAVINGS ON CHARITABLE GIVING
Donating appreciated stock instead of cash may help you get a bigger tax break.
The greater the appreciation of your stock’s value, the greater your tax liability when it comes time to disburse the funds from its sale if you withdraw it as cash (even if you then give the cash away). Direct donations of appreciated publicly traded stocks, many mutual and investment funds, and some bonds – rather than selling, paying capital gains tax, and donating cash – can save you considerable money and increase your donation power.
- Subject to your donor contribution limit, you would pay no federal or state capital gains tax on the current value of your holdings.
- Donors who itemize may be able to take a charitable income tax deduction for the full current value of the securities at the date of donation as well.
(Check with your broker as to whether back-end load mutual fund fees might also be avoided via broker-to-broker direct transfers.)
CAIA, as a 501c3 nonprofit, is able to sell stocks transferred to it without having to pay capital gains either – truly a win-win for all!
(If you would like to divest yourself of stock that has depreciated in value since you bought it, selling the stock instead and writing a contribution check to CAIA may allow you to claim a loss against what you owe on your taxes, saving you money in that way.)
Consult your financial advisor for full information on the tax advantages available to you and how to report a transfer on your taxes.
- You may, for instance, be able to transfer stocks (or cash) held in an IRA account if you have reached the age where you must take distributions – and this Qualified Charitable Distribution would be excluded from your taxable income. (This would save you money over taking a regular Required Minimum Distribution and then making a charitable donation.)
- In any case, you must have owned the securities for at least one year and a day before donating them or you will be limited to a deduction of your original purchase cost, even if the security did appreciate.
- And a transfer must be completed in the year you take a tax deduction – and you will probably need to allow a few weeks for this to occur (i.e., it’s safest to begin the process before December!).
DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.
If you would like to go ahead with this method of supporting CAIA’s work, here is how to do it…
[ There is another way to donate with tax benefits – including donating cash and publicly traded stocks/etc. AND even such assets as privately held stocks, real estate, insurance policies, and even bitcoin and, yes, oil & gas royalties – via a ‘charitable giving fund’, usually utilized by people or companies with larger portfolios. See https://www.fidelitycharitable.org/giving-account/giving-account-details.html ]
INSTRUCTIONS FOR DONATING STOCKS/FUNDS/BONDS*
[*U.S. Savings Bonds cannot be donated during your lifetime, though they can be bequeathed to a charity. Check with your financial advisor about transferability of other types of bonds, some of which might not be to your advantage to donate.]
Remember that to receive any tax write-offs you are entitled to, you must not sell your appreciated securities. Instead, you will make a request to your broker/bank to transfer them to CAIA’s brokerage account.
NOTE: If you wish to specify that proceeds from your gift be used only for a certain purpose, please contact us first at firstname.lastname@example.org so that we may be sure we can honor your request.
Step 1 – Complete the Electronic Transfer:
Instruct the institution holding your stocks to transfer the shares to the “Citizens Allied for Integrity and Accountability, Inc.” account at E*TRADE Securities using the following information:
- Name of Broker-Dealer/Transfer Agent: E*TRADE Financial Corporation
- Address: Harborside 200 Hudson Street, Suite 501 – Jersey City, NJ 07311
- DTC # 0385 [DTC = Depository Trust Company]
- Beneficiary (C.A.I.A.) Account # 37633987
- Should you require it, CAIA’s Employer Identification Number (EIN)/Federal Tax Identification Number (TIN) is 47-4355172
- Please ask your broker to provide your name with the transfer documentation
You will be asked to fill out a Gift Form of some kind. (Gifting from within an IRA will also likely require an additional form from your bank or brokerage.)
The originator of your mutual fund may stipulate a minimum dollar value of the shares they will transfer from your account.
You will probably be asked to obtain a Medallion Signature Guarantee stamp (green, similar to a Notary Public’s black stamp) on the completed document(s) at an eligible financial institution. Then you will need to mail the form to your brokerage firm.
NOTE: CAIA’s policy is to not make public any details of your donation. If you want to take a tax deduction, your donation to CAIA cannot be completely anonymous, because we need your name and address to mail you an acknowledgement letter.
Step 2 – Notify CAIA of Gift:
Securities donations transfer to CAIA’s account with no accompanying donor information. In order for CAIA to identify your gift and send a tax receipt, you will need to provide us with your name and address and the gift details including the name of the stock or mutual fund (and, for a mutual fund, its CUSIP number and Symbol), the number of shares being transferred, the name of your brokerage firm/bank, the date of transfer, and the name of the financial advisor handling the transfer.
Please notify CAIA of your donation in one of the following ways:
- Download our Securities Gift Notification Form and mail the completed form to: C.A.I.A., Attn: E. Roberts, Treas., PO Box 2622, Eagle, ID 83616
- E-mail these details (or the scanned Securities Gift Notification Form) to email@example.com
As soon as your donation is received and identified, CAIA will have the securities sold and will then mail an acknowledgement letter to you.
For tax purposes, the value of a charitable gift of stocks/bonds is determined by taking the mean between the high and the low stock price on the date of the gift. Mutual fund shares are valued using the closing price for the fund on the date of the gift. This information should be provided to you by the transferring broker. The date that your shares are received in CAIA’s account will be the date of your gift.
FOR YOUR RECORDS:
It is very important that you receive and retain the confirmation of your transfer as proof of your tax deduction claim. Keep both the confirmation from your bank/broker and the acknowledgement letter you receive from CAIA.