Benefits of Donating Appreciated Assets (stock, mutual fund, etc.)
1. Avoid Capital Gains Tax
When you donate an appreciated asset that you've held for over a year, you avoid paying capital gains tax on the increase in value.
2. Receive a Charitable Deduction
You can claim a charitable tax deduction for the current full fair market value of the asset at the time of donation.
3. Support a Charity Efficiently
The charity receives the full value of the asset and can sell it without paying taxes (as charities are tax-exempt), maximizing the impact of your gift.
4. Preserve Cash
Instead of using cash for a donation, you can donate an appreciated asset and preserve liquidity for other needs.
Example: Donating Appreciated Assets
- You bought stock for $1,000 several years ago (cost basis).
- It's now worth $10,000 (fair market value).
- You’re in a 20% long-term capital gains tax bracket.
- You want to donate to a charity.
- You transfer the $10,000 worth of stock directly to the charity.
- Pay $0 in capital gains tax.
- Tax deduction: $10,000.
- The charity sells the stock tax-free and receives the full $10,000.
Result:
- You donate $10,000 as an asset that cost you $1000.
- By donating your appreciated assets directly to the charity, you can avoid paying $1,800 in capital gains taxes — which means your gift goes even further, increasing your impact by $1,800 at no additional cost to you.
TAX BENEFITS OF CHARITABLE GIFTS FROM YOUR IRA
Did you know that you can donate directly from your IRA with a QCD? Qualified Charitable Distributions of up to $108,000 can be made in 2025 without counting as income if you are over 70 ½ and can satisfy your Required Minimum Distribution (RMD). They are easily made by completing a simple form provided by your financial institution. Need help? Email Lori Abrams, Director of Development, or give us a call at 973-761-0422
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