How to Donate Personal Stock to Charity

Donating stock to charity is a smart approach to philanthropy. Stock gifts have several advantages over cash. When you give stock that has grown in value since you bought it, no capital gains tax is paid. This allows you to give more to the charity at less cost to yourself. Plus, you can take a tax deduction for the larger amount of the donation.

Difficulty:

Moderately Easy

Instructions

1. Purchase a stock of your choice. Look for companies with strong fundamentals and the potential for long-term growth.

2. Hold the stock for at least 1 year and watch it grow. If you hold the stock for less than 1 year, you will not be able to take the full deduction. Instead, you will have to use your cost basis (the amount you originally paid) as the amount of your deduction.

3. Contact the charity you wish to support. For electronic transfers, you need the Depository Trust Company (DTC) number, account name, tax ID number and account number. If you are mailing the stock certificates, you must send a stock waver form and stock power form.

4. Notify the charity once you have sent your gift. Keep records of all communication for tax purposes.

5. Take the appropriate deduction on your next income tax return. Your accountant or lawyer can help you if there is any confusion.

Tips & Warnings

• Work with charities to arrange stock gifts according to their preferences, because they vary from organization to organization.

• Donate stock holdings that are too small to sell profitably. If you received a small number of shares in a spin-off or as an employee, the sales commission is often too high to benefit from direct sale of the stock.