Give stocks
and appreciated securities forgood.
#SecuritiesForSecurity is a campaign to spread the word about tax-smart giving options for nonprofits and donors, maximizing impact while minimizing tax burden.
Why Donate Stock?
Giving stock and appreciated securities is a win-win for both nonprofits and donors: stock gifts make a big impact while saving money in the process.
When donors give stock, they don’t have to pay a capital gains tax and can take a charitable deduction on the current value of their shares, making it a tax-savvy way to give to their favorite nonprofit organizations.
For Nonprofits
Diversify your giving options and maximize your fundraising potential. Ask for #SecuritiesForSecurity!
The average stock donation is worth $5,000, meaning that accepting gifts of securities is a potential revenue stream for major gifts and is an opportunity to build and deepen relationships with your donors.
Nonprofit FAQ
- At year end, when people make their tax-savvy giving decisions, make sure that you ask directly and on multiple occasions for gifts of securities.
- Increase visibility around stock donations by joining the #SecuritiesforSecurity movement! Feature the logo in your social media posts, digital ads, emails, e-newsletters, giving pages, and lightboxes. Promote stock gifts through direct mail, including on the business reply card (BRC), outer envelope, or on a special buckslip encouraging alternate ways to give.
- Download the Resource Kit for Nonprofits to spread the word about donating stocks and appreciated securities!
- To start receiving transfers of stock, the first step is to open a brokerage account. Make sure to monitor this account regularly for new stock donations so you can immediately value the shares received for donor tax receipts.
- Let donors know that this is a giving option! Create a stock giving page on your website and promote this as a way to give in your digital marketing and direct mail materials like social media posts, emails, and a special buckslip encouraging alternate ways to give.
TIP: For increased security, do not put your brokerage transfer details directly on your stock giving webpage. Instead, collect the donor’s information first, like contact details, what kind of shares they are transferring, the date they plan to donate, and confirm if the donor is giving stock that has gone up in value and has been held for more than a year so they can receive a charitable deduction. You can designate a specific contact person in your organization to collect these details or ask donors to complete a form on your website that links to another page or triggers an automatic email that has your transfer information. A quick response to these inquiries is important because a delay can result in a lower amount of completed gifts.
- It is best practice to sell the donated shares the day you receive them. When you do this, you avoid the accounting discrepancy between the donated value and the actual cash proceeds.
- Thank the donor and send a tax receipt. Your tax receipt should include information like the date of transfer, value of the donation, number of shares, and the stock’s ticker name. Of course, you should also use this opportunity to thank them again! This will assure donor that their gift went through.
- Make sure to enter the gift in your database or CRM and note the asset type (e.g., stock, QCD, DAF) to better keep track of donor giving history and cultivation, including soft crediting in line with your data management policies for consistency.
- When donors give stock, they don’t have to pay a capital gains tax and can take a charitable deduction on the current value of their shares, making it a tax-savvy way to give to their favorite nonprofit organizations.
- The average stock gift is $5,000. For nonprofits, accepting gifts of stock and appreciated assets build a potential major donor revenue stream.
For Donors
Stocks are an amazing way for you to maximize your charitable giving, and, ultimately, your impact. Give #SecuritiesForSecurity!
Donor FAQ
- When you donate appreciated securities like stocks, bonds, or mutual fund shares, you are able to deduct the gift as a charitable donation and avoid capital gains tax at transfer. This means that you can make a larger gift to your favorite charity at essentially the same investment to you.
- If you sold the stock and then donated the funds, you would have to pay capital gains on stock appreciation, and the nonprofit receives less of the originally intended gift.
Keep in mind that you can only receive a charitable deduction for the fair market value, or current price of the stock, if you’ve held it for more than a year. For stock held for less than a year, your deduction is limited to the cost-basis (what you paid for the stock), not its current value. Also, private stock will need to have value appraised by a broker or financial institution first since its value is not known on the open market.
- As a donor, you not only realize a tax deduction for the value of your gift of stock (which is the same deduction you would realize giving cash or other assets), you also avoid paying capital gains. This means that you actually give more to a charity at the same cost to yourself.
- Stocks reside in savings accounts, retirement accounts, and Donor Advised Fund accounts. These accounts accumulate wealth and represent the greatest source of wealth for individuals, so it’s important to be aware of tax-savvy ways to fulfill your charitable priorities.
- It is best practice to sell the donated shares the day you receive them. When you do this, you avoid the accounting discrepancy between the donated value and the actual cash proceeds.
- Thank the donor and send a tax receipt. Your tax receipt should include information like the date of transfer, value of the donation, number of shares, and the stock’s ticker name. Of course, you should also use this opportunity to thank them again! This will assure donor that their gift went through.
- Make sure to enter the gift in your database or CRM and note the asset type (e.g., stock, QCD, DAF) to better keep track of donor giving history and cultivation, including soft crediting in line with your data management policies for consistency.
A capital gains tax is a tax on the growth in the value of investments incurred when individuals and corporations sell those investments. When the assets are sold, the capital gains are referred to as having been realized.
- There are two capital gains taxes: federal and state.
- Federal Capital Gains Tax: If the securities have been held for more than a year, the capital gain, i.e., the profits realized between purchase and sale, will be taxed at 15% or 20% (based on income). This does not apply to the entire value of the shares – it applies to the profits realized, hence, the capital gain. If the stocks have been held for less than a year, the gain will be taxed at the seller’s income tax rate.
- State Capital Gains Tax: Stockholders who sell securities at a gain are subject to the Federal Capital Gains Tax and a State Capital Gains Tax if their state has one. Not all states levy a capital gains tax.
- Nonprofit organizations should accept gifts of appreciated assets all year long, so donors can give at the time that is more convenient for them.
- Donors take note: For your gift to be eligible for your 2021 tax return, you must give by December 31, 2021.