You’ve likely seen recent reports of record highs in the stock market. When the market is strong, we see an increase in giving across the board. A 2018 report by Giving USA found that stock market values “are an indicator of financial and economic security,” and that “households and corporations are more likely to give when the stock market is up.”
Reasons stack up for giving stock
Giving long-term appreciated stock – stock that you’ve held for more than one year – to charity is a smart way to give for three reasons:
01 / When the market is strong, the value of your gift is higher. Simply put, you have more to give.
02 / You avoid capital gains tax on stock when you gift it to charity. This is especially beneficial when the stock has experienced significant growth. In Minnesota, your capital gains tax could be as much as 30% on the appreciated value when combining federal and state taxes.
03 / You also receive an income tax deduction for the full value of the donation up to 30% of your adjusted gross income. Work with your tax advisor to determine further benefits
In these ways, a gift of appreciated stock can be more advantageous to both the donor and the benefiting charity than a simple gift of cash.
New standard deduction, new giving strategy
The new, higher standard deduction makes it harder for taxpayers to itemize. But when you make a large gift, like appreciated stock, you’re suddenly much closer to being able to itemize your deductions. This may unlock other deductions as well.
When you use a donor advised fund, you can spread that large charitable gift across many organizations and over several years. This strategy is called “bunching.” There’s no need to wait until the end of the year to give charitably.
With the market performing well, now might be a good time to consider a charitable gift of stock. The Catholic Community Foundation of Minnesota can help. Give us a call today at 651.389.0300.
Click here to learn more about using a donor advised fund to “bunch” your charitable giving.
We advise you to seek your own legal, tax, and financial advice in connection with gift and planning matters. The Catholic Community Foundation of Minnesota and its staff do not provide legal, tax, or financial advice.