How to Donate Stocks to Charity: A Guide to Donating Appreciated Shares
Donating stocks, securities and mutual fund shares to charity are a great way to support the causes you care about. Gifting stocks to charities like Children’s Health is a great way to make an impact while taking advantage of a tax-deduction and removal of future capital gains.
Is it Better to Gift Stock or Cash to Charity?
There are several great reasons to donate stock – it’s one of the most tax-savvy ways to give, and today’s online platforms make it an easy and secure process.
Donating appreciated stock is generally more advantageous than giving cash, as it offers donors greater tax benefits.
Avoid Capital Gains Tax
When you donate appreciated stock, you avoid paying capital gains tax that you might otherwise owe if you sold the stock and then donated the cash proceeds. This can significantly increase the value of your donation.
Receive Large Tax Deduction
You can claim a tax deduction for the full fair market value of the stock at the time of the donation. This deduction can be up to 30% of your adjusted gross income for stocks held for more than a year.
Make a greater impact for the charity
Because you avoid capital gains tax, more of your donation goes directly to the charity, allowing them to benefit more from the gift.
Rebalance Portfolio
Donating appreciated stock provides an opportunity to rebalance your investment portfolio without triggering tax consequences.
How to Donate Stocks to Charity: Step-by-Step
Step 1: Choose appreciated stock you've held for more than one year to maximize the tax benefits.
Step 2: Contact your financial institution and fill out all stock donation transfer forms.
Each stock donation must also have a signed stock power that should be mailed to the same address at the same time. Please mail the stock certificates and stock powers in separate envelopes
If the stock donation is registered in more than one name, each person must sign the stock power form. Sign only your name(s) on the stock power form and sign exactly as your name appears on the stock certificate.
Please include a note with the stock certificates indicating the designation of your gift
Step 3: Contact Children’s Health Gift Planning at 214-456-8360 or giftplanning@childrens.com to let us know that a stock donation transfer is in process and what is being contributed. We will provide the necessary instructions to complete your gift.
Step 4: Confirm the stock donation was completed and request a tax receipt and letter of acknowledgement.
Step 5: Report the charitable stock donations when you file your tax return.
Frequently Asked Questions About Donating Stocks
How much stock can I donate to charity?
With stock donations to charity, you are limited to 30% of your Adjusted Gross Income, meaning you may need to carry deductions into future tax years if your contribution exceeds this threshold (this carryforward is good for up to 5 years).
How do I report a gift of stock to a charity?
With your tax return, you need to report the stock donation to charity on IRS Form 8283, used for your noncash charitable contribution.
Can I leave stocks to a charity in my will?
Yes, you can make stock donations to charity as a part of your legacy. If you plan to make a bequest of stock to Children’s Health, we recommend consulting an estate planning attorney.
When is the best time to donate stocks to charity?
For you to get a tax reduction for the existing tax year, the stock donations must be completed on or before December 31 of that year. The tax records will only acknowledge the date your donation was received by Children’s Medical Center Foundation, not the date you initiated the transfer. Plan for your year-end stock donations to meet-up with the tax year.
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