Articles / Insights & Guidance from our Leading Professionals

by Tiya Lim, MBA | December 19, 2018

Support Charitable Organizations with Gifts of Securities

Gifts offer a three-way benefit to the donor

Tiya Lim, MBA
Director, Institutional Services
[email protected]

Investments in securities can represent a significant portion of an individual’s or family’s assets. Stocks and other investments are often an important part of one’s long-term plans, but did you know that your investments can also be an excellent source for charitable gifts? Stocks, bonds, mutual funds, and other securities that you have owned for more than one year not only make convenient gifts, but can provide you with a tax benefit as well.

Why should I consider a gift of securities?

  • While cash is the most popular form of charitable gift, gifts of non-cash assets such as publicly traded stocks or bonds can be attractive because of the favorable income tax treatment they may bring.
  • If you own securities that have appreciated in value over time, you may owe a substantial capital gains tax if you sell them. But, if you use such assets to fund a charitable gift, you may completely avoid the capital gains tax while enjoying a federal income tax deduction for the full value of the securities. Giving securities helps conserve cash for other uses. You also may be able to make larger gifts than you thought possible.

Which security should I give?

  • For maximum tax benefits, it is usually best to give securities that have increased in value the most since you have owned them. Or you may wish to give a particular security as part of efforts to simplify a portfolio.

What if the securities have dropped in value?

  • To give securities that are worth less than their purchase price, it is usually best to sell the asset, then give the cash proceeds. You may then be able to claim tax benefits for both the capital loss and the charitable gift.

Is it possible to give mutual funds?

  • Yes, the same appreciate rules apply to gifts of mutual funds.

How do I make a gift of securities?

  • You can coordinate the transfer of your securities with your financial advisor or broker directly to the organization’s account.

By giving securities, you can maximize the size of your charitable gifts, conserve cash you would have given, and enjoy tax benefits. Our investment advisor, Creative Planning would be happy to assist you and/or your advisors with gifts of securities. Please contact us for additional, confidential information at no obligation.

This commentary is provided for general information purposes only and should not be construed as investment, tax, or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

Tiya serves as Director of Institutional Services at Creative Planning. In this role she leads Creative Planning’s offering to institutions and nonprofit organizations. Her areas of expertise include endowment-related best practices, development of Investment Policy Statements and Spending Policies and fiduciary training.

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