Contributing Stock Rather Than Money to Charities

Perhaps donating cash to a charity of your choice is what you do every year. Sometimes this can be a bit taxing, especially taking into consideration the economic crises and financial difficulties most people are experiencing at present. Taking all this into consideration, you also probably want to still continue making donations to this charity. A more viable method might be donating stocks instead of hard cash. This is not only easier on the purse, but might also enable you to up your donation to the charity.

In order to donate stocks towards a charity of your choice, you have to be in the 15% federal income tax bracket or above it. It is important that you also have adequate tax deductions that can be itemized rather than experience the normal deductions on your personal tax return.
Once you have chosen the charity you want to donate to, make sure that it is registered under the 501c3 nonprofit label with the IRS, otherwise your stock donation might not be deductible.

Next, analyze all the stocks you have under your name. The stocks you want to donate must be listed under your name for a minimum period of one year and have risen fairly significantly. This does not necessarily mean the stock must be one company’s stock, but must be under your name for at least a year.

If the stock you want to donate has risen in terms of value, then your donation to the charity is more than what you put down money for. For example, if you paid $5,000 a year ago, and at present if it is worth $20,000, then your donation to the charity is four times more than what it actually cost you.

Next, it might be worthwhile for you to do the math and take into account the amount of tax savings you have made. Here is an example:

Sold stock ($) Capital gains tax/15% Tax savings
$10,000 $9,000/15% $1,350 ($9,000×15%)