The Benefits Of Donating Stocks To a Charity
Charitable giving has changed massively in recent years. Donating stocks is fast becoming a more popular way for us to make charitable donations. Donating stocks also comes with some additional benefits, both for the donor and the charity receiving the donation.
When you donate stocks that have appreciated for over a year, you end up giving 20 percent more than you would if you simply sold the stock, then make a cash donation.
If you donate a security with an unrealized capital gain, you don’t have to pay that capital gain in the future – neither will the charity.
In addition, your donation is tax-deductible, allowing individuals to claim a tax deduction based on the fair market value of the stock at the time of transfer.
Convenient And Easy
Making charitable donations through stocks is easy to do wherever you are – you can even do it on a mobile device. So long as your chosen charity has the mechanism in place to receive stock donations, you’re good to go.
There are several third-party services out there that will take care of your donation on your behalf, so the process couldn’t be easier.
Rebalancing Your Portfolio
Donating stocks is a good way for you to balance your own stock portfolio and give it a health check. If on reviewing your portfolio, you find your investments’ gains and losses need rebalancing, donating stock to charity is a great way to do this.
Common Myths About Donating Stocks
Donating stocks to charity is still a fairly new procedure for many, and there are several misconceptions around the process. Let’s debunk some of those myths once and for all.
1. Only Big Businesses Can Donate Stocks
Donating stocks isn’t just the for big companies and high-net-worth individuals. As long as you’ve held your asset for over one year and it has increased in value, you can make a stock donation to a charity.
2. Donating Stocks Is Difficult
Charitable giving through stock donations couldn’t be easier. First you should find out if your chosen charity has a brokerage account that will accept stock donations.
This information shouldn’t be hard to find, in fact, many charities have a dedicated page on their website that includes all the details you need. Your broker or third-party service can then initiate the transfer on your behalf.
3. Many Charities Don’t Even Accept Stock Donations
There may be a grain of truth to this one, but the way we make charitable donations is changing quickly. Indeed, 80% of all donors in the United States own appreciated stock or securities.
More and more charities will be looking to get involved in this lucrative arena if they haven’t done so already. Even if your chosen charity doesn’t accept stock donations right now, it probably will in the very near future.