Cash and Securities

Cash is the go-to gift from most supporters of The Alliance, because it is convenient and easy.  Cash makes sense on many levels, but when the donation increases in size, giving appreciated assets might make more financial sense.  Mutual Funds and publicly traded stocks fall into this category of support.

Why are these types of gifts more beneficial to your finances?

  • You receive a charitable tax deduction on income tax.  For people who itemize on their federal tax returns, the deduction is equal to the full value of securities held more than one year.  There is a 30% deductibility limit of AGI (adjusted growth income) with a 5-yr carryover of excess.
  • You can avoid capital gains tax on appreciation of securities held longer than a year

So you could

  • Fund a charitable remainder trust or gift annuity with The Alliance as the residual beneficiary, or support an Alliance program with an endowment of stock to get the deduction and increase the amount available for distribution
  • Make your annual gift a stock-based gift

If you wish to keep your stock portfolio intact because your stock has appreciated, but your are planning on making a gift, consider “repurchasing”.  You can contribute a specific dollar value worth of the appreciated stock, then repurchase the same amount of shares on the market with cash.  You will receive the same deduction as the amount of donated shares, without having to pay tax on the capital gain, plus you increase the perceived cost of the stock, so you can reduce the capital gains tax due when you decide to sell the stock.

If your stock has depreciated in value, you are better off selling the stock and giving the cash proceeds.  If you gave the depreciated stock directly to The Alliance, you wouldn’t be able to take the deduction for the capital loss.  When you “take the loss” by selling the stock and donating the cash amount, you will actually get two deductions:  One for the charitable gift and one for the capital loss.

 

For more information, contact Alliance accountant Mark Dubey at Weisbrod & Associates.