While cash gifts are one of the most common forms of giving, more and more donors at The San Diego Foundation are contributing stock because of the added tax advantages that come with them.

Currently, the federal tax code provides incentives for making charitable gifts of appreciated securities, including public stock. This means that when you donate stock, you are able to make a larger philanthropic impact and enjoy greater tax advantages than simply donating cash or selling the stock and donating the proceeds.

Whether you have a few shares to give or a significant sum, when you contribute stock to a new or existing donor-advised fund at The San Diego Foundation, you can:

  • Claim a charitable deduction equal to the fair market value of the public stock
  • Avoid capital gain income on the appreciated value of the stock, which allows you to grant out more to the community
  • For large stock gifts, you can claim a charitable deduction of up to 30 percent of your adjusted gross income for the year

Gifting Stock Explained

Wealth advisor Mark Petrie of Aspiriant, one of the nation’s leading independent wealth management firms, has been helping successful San Diegans achieve their long-term financial goals for years. One of his most recent case studies includes David Engel, a donor-advised fund holder at The San Diego Foundation.

While going through their annual strategic planning and review, Mark and David identified a few publicly-listed stocks with significant unrealized gains held in David’s Family Trust.

Mark recommended donating those assets to his donor-advised fund at The Foundation. That way, instead of selling appreciated shares and owing large sums in capital gains tax, the entire value of his investment return could be utilized for charitable giving and tax deductions.

Once Mark and David agreed on which assets to gift and how much, they worked with The Foundation staff to complete the process.

The Foundation provided David with instructions on how to transfer the assets, along with a gift letter that included an estimated range of the fair market value of the donated stocks. That letter was then used by Mark to calculate the tax deduction David would receive through the transaction. Because the final sale of the stock from The Foundation’s brokerage account can occur a few hours or days after Mark and David execute the transfer, the estimated range of the fair market value ensures the best price for the donor at the time of the decision.

As soon as The Foundation received the transferred stock in its brokerage account, our broker proceeded to find the best price and sell the stock.

Once that process was complete, the amount that the broker sold the stock for was transferred into David’s donor-advised fund, and he immediately had a new pool of money to grant to nonprofit organizations strengthening our community.

Simplifying the Process

For many, the process of gifting a complex asset like public stock can be overwhelming. Our expert advisors have decades of experience working with wealth advisors and philanthropists to identify the best strategy.

If you are considering a gift of public stock, we can connect with you or your wealth advisor to help you accomplish your philanthropic goals.

Note: If you’d like to donate stock before the end of 2019, the deadline for the stock donations to arrive to The San Diego Foundation brokerage accounts is 1:00 p.m., Dec. 20, 2019.  

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