Donating Stock to Charity

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nonprofit stock donation policy

In this guide, we’ll cover how to accept stock donations without causing your nonprofit financial or emotional stress plus the top three ways it can benefit your nonprofit. Donating stock to charity can be a smart way to maximize your charitable impact while benefitting financially. For investors with appreciated stock positions, it’s a unique way to strategically align your values with your financial goals and establish a legacy of giving. For most taxpayers, the long-term capital gains tax rate is 15%, as of 2023. That means if you need to liquidate your shares for any reason, you might be hit with a substantial tax bill.

nonprofit stock donation policy

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nonprofit stock donation policy

Best of all, Veronica and Matt recommended a larger grant from their donor-advised fund than they would have been able to if they had sold the shares and donated the net proceeds how to accept stock donations as they originally planned. At first, they thought of simply just selling the stock and donating the proceeds. Although they had established a private foundation in the past and also considered that option, their advisor suggested that they use a donor-advised fund instead. Using a donor-advised fund provided the ability to claim a higher tax deduction of 30% of their adjusted gross income compared to the 20% limit with a private foundation.

For publicly traded shares, the fair market value is the average of the high and low price on the transfer date.
Here’s a guide to how you can donate stocks and reap tax rewards for your generosity.
If you’re fortunate enough to own stock that has gone up in value since you purchased it, you should consider giving some or all of it to your favorite charity.
Read on to learn how stock donations help you connect with more donors.
Donating stocks directly to registered charities can be one of the most tax-smart ways for donors to give.
But as financial needs grow, many nonprofits consider diversifying their revenue streams through investments.

Stocks, Wire Transfers and Mutual Funds

There’s real-time donor transparency as your nonprofit gets notified and the donor receives an email to forward to their broker to initiate the stock transfer process. Nonprofit stock donations can also provide a CARES Act path to long-term operational viability by helping nonprofits budget more effectively. Accepting stock donations also offers a donor another way to make a donation. A Texas Tech University study found that nonprofits that accepted non-cash donations of securities saw 66 percent revenue growth over five years, while those that accepted only cash saw 11 percent growth. To allow your nonprofit to accept stock donations, everyone involved (your donor and your organization) must work together through a stock brokerage account. To donate stock to charity, you’ll first want to find whether the receiving charity has a brokerage account that can accept gifted stock.

Donating stocks is the most tax efficient way to give

nonprofit stock donation policy

When you donate shares of stock to charity, you’ll be required to fill out IRS Form 8283 when you file your income tax return. With a donor-advised fund, you can get a tax deduction for the full https://www.bookstime.com/ amount in the year you make the initial donation, but you don’t have to disburse the full amount immediately. Instead, you let the fund know how and when you want to make charitable gifts.

The Nonprofit Blog provides several guides, ideas, how-tos, and more that cover a variety of topics, from online giving to fundraising events and beyond.
While not mandatory, ethical investing aligns with mission-driven principles and is often preferred by donors and stakeholders.
Gifts of stock are usually quite larger than cash gifts, and they represent a huge pool of potential donation revenue—the US Census estimates that 97-99% of wealth is held in non-cash assets.
Once the donor submits their information, you can send the donor the requisite information to facilitate the stock transfer, such as depository trust company (DTC) information, brokerage information, etc.
These online forms and donation pages are fully customizable and include options such as recurring giving, designated funds, tribute gifts, and more.
Accepting donations of securities is an excellent way to boost the growth of your nonprofit and provide a ready source of cash flow for operations.

How to Accept Stock Donations The Donorbox Guide

nonprofit stock donation policy

Nonprofits also commonly develop stock acceptance and investment policies that specifically lay out the process and guidelines by which stocks will be accepted as donations and liquidated. Prospective donors are sometimes more willing to give from their gains on investments rather than from their disposable income. Allowing gifts of stock can encourage generosity from individuals who might otherwise put off giving a cash donation of equal value. Carefully managing relationships with donors can lead to recurring stock donations of significant value. If you replace the appreciated shares that you donated, you will be doing so at a higher cost basis than the old shares.

Monetary charitable donations statistics

With this link, donors can quickly gift their appreciated stocks to you. In order to receive transfers of stock, you’ll need to open a brokerage account. Research which brokerage firm is the most convenient for your organization and has the lowest fees — the most common are Schwab and Fidelity Charitable. Make sure that the designated finance or accounting team member monitors this account daily for new stock donations so that received shares can be immediately valued for donors’ tax receipts.