Smart Stewardship: Stocks & Securities

Written By Karen Marsh

Tax-efficient gifting with appreciated assets | Want to be smarter with your charitable giving? Consider this.

Adapted from Fidelity Wealth Management’s white paper. ASK YOUR FINANCIAL ADVISOR ABOUT WHAT IS BEST FOR YOU!

Key takeaways

  • Gifting assets, rather than selling them and donating the after-tax assets, can maximize your gift and provide a larger charitable deduction.

  • A donor-advised fund is an efficient way to manage your non-cash giving.

  • Whether you’re a seasoned philanthropist or you just started giving back, you have an opportunity to make an impact with smarter charitable giving—and it's as easy as picking the right asset.

When it comes time to support Theological Horizons, many donors instinctively reach for their checkbook or cash. Instead, you can potentially maximize the impact of your giving for both you and the ministry when you consider giving often overlooked non-cash assets, such as appreciated stocks in your portfolio, privately held business interests, or even cryptocurrency.

Because long-term appreciated holdings or investments may be prime assets for tax-efficient giving, exploring this strategy has the power to potentially take your philanthropy—and your overall financial plan—to the next level.

Give more than just after-tax proceeds

What if you could maximize your charitable impact and tax savings at the same time, all by using an asset that will give you a much bigger bang for your buck? Consider this hypothetical example. As a charitably minded individual, say you make a $5,000 cash gift to your favorite charity. While you usually just write a check, you also hold stock with a current fair market value of $5,000 that you purchased at least one year ago for $2,500. Perhaps your first thought is to sell the long-term appreciated stock, pay the capital gains tax, and then donate the net cash. Assuming a 15% capital gains rate, you’d only have $4,625 in net proceeds to donate, compared to the stock’s current fair market value of $5,000 or your $5,000 check.

This chart demonstrates how donating $5,000 in securities directly to Theological Horizons instead of selling the securities and donating the after-tax proceeds could allow for an additional $375 to be dedicated to the charity. In this example, contributing the stock directly to the charity is a more effective donation than just giving the after-sale proceeds: You have more money to give to support Theological Horizons’ mission.

Maximize both your tax benefits and charitable impact

Donating your stock directly to Theological Horizons also unlocks 2 key tax benefits for you:

  • It may eliminate the capital gains tax you are facing on the sale of the stock &

  • the stock donation is tax deductible at the current fair market value

As a result, the most long-term appreciated stock in your portfolio is often the best to donate because it offers the greatest potential tax benefit.You could also maximize your charitable gift. Because Theological Horizons does not need to pay the capital gains tax, it can now sell the stock you donated for its full, current fair market value and keep 100% of the proceeds – while you get the tax benefits.

Apply the strategy to other appreciated assets

When considering which asset to give, you can look beyond the traditional publicly traded securities in your portfolio. Vested shares in your company stock derived from an equity compensation program could be a powerful source of charitable funding. Long-term appreciated private company C- or S-corp stock, private equity partnership interests, or Bitcoin and other cryptocurrencies can also help you realize the same tax benefits. Work with your financial advisor to navigate how to make the most effective and impactful gift.

Make your gifts hassle-free

Here’s one option to explore. When considering making this type of donation, many smart donors use a donor-advised fund (DAF) program to manage their complex contribution from end to end, allow them to support multiple charities from a single tax-advantaged charitable gift and keep recordkeeping and administration simple throughout the year.

Here’s the bottom line: Tap into smarter charitable giving with assets beyond cash, and you may make more of a difference for Theological Horizons and for other causes you care most about!

Ready to donate appreciated assets directly to Theological Horizons?

We have simple instructions to share with you.

Reach out to us at info@theologicalhorizons.org

THANK YOU!

As an independent Christian ministry, Theological Horizons is completely funded by donors just like you: giving partners who share our vision. We depend upon your support and carefully steward your contributions.

Theological Horizons is a 501(c)(3) not for profit charitable organization, tax exempt #581594037.

Your contributions are tax deductible. www.theologicalhorizons.org/giving

Resources

Karen Marsh
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