Growing Stock, Growing Generosity: How a Gift of Stock Can Be A Win-Win
February 27, 2020
Coming off a very strong 2019 in the stock market, it’s very likely that you have clients who own stock that’s increased in value since its purchase. If they’ve owned the stock for at least one year, they have a unique opportunity for philanthropy.
When someone donates securities to the Baltimore Community Foundation, they receive the same income tax savings (if they itemize) that they would if they wrote BCF a check, but with the added benefit of eliminating capital gains taxes on the transfer, which can be as high as 20 percent.
Making a gift of securities to support our mission to improve the quality of life in Baltimore is as easy as instructing a broker to transfer the shares or, if your clients have the physical securities, hand-delivering or mailing the certificates along with a stock power to BCF in separate envelopes. (Tip: Using separate envelopes protects the gift— the certificates will not be negotiable without the stock power.)
How does it work? A stock purchased more than one year ago for $10,000, which has appreciated to $25,000 today, would trigger $2,250 in capital gains tax if sold ($15,000 X .15 capital gains tax rate). On the other hand, donating the stocks to BCF would generate a $25,000 income tax charitable deduction, and $0 capital gains tax.
Using assets other than cash also allows for more flexibility when planning a gift. For example, if a client isn’t ready to give up these assets during their lifetime, a gift of securities through their will or living trust allows for the flexibility to change their mind at any time. Your client(s) can continue to receive dividends and participate in shareholder votes, and the securities are still theirs if they need them for other expenses.
BCF staff are available to work with you to help you secure your clients' financial future, plan for tomorrow, and receive maximum benefits today.
Take the Next Step
For more information on the process for donating stock to BCF, contact Dara Schnee, VP of Philanthropy, at 410-332-4171, 130 or firstname.lastname@example.org.
The information in this publication is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact individual results.