Should you donate appreciated stocks?
Many people think about generosity in terms of income earned. But some of your greatest opportunities to give come from something else entirely – the growth of your investments.
What are appreciated assets?
Appreciated assets represent the money you’ve earned on your investments. For many people, appreciated assets are part of their portfolio that they don’t realize as earned income.
Why would I donate an appreciated asset to a donor-advised fund?
When an investment increases in value, selling it usually triggers capital gains taxes, reducing the amount available to give. Donating appreciated assets to a donor-advised fund offers a smarter alternative. It allows you to support the causes you care about while potentially reducing tax liability.
Imagine you purchased stock years ago for $10,000. Over time, it grows to $50,000. If you sell the stock, you may owe capital gains tax on the $40,000 gain, reducing the amount available for generous giving. However, if you donate the stock directly to a donor-advised fund:
- You may avoid the capital gains tax on the $40,000 growth.
- You may receive a charitable deduction for the full $50,000 value.
- The entire amount can then be used to support the organizations and causes you care about.
In other words, more of your investment goes toward making an impact instead of taxes, which is great news for strategic givers!
Flexibility to give thoughtfully
Donor-advised funds also give you flexibility. You receive the tax benefit when you contribute the asset, but you can recommend grants to nonprofits later at your own pace. In the meantime, if you choose to invest your donor-advised fund, the funds can grow tax-free.
A smarter way to give
When you donate appreciated assets, you can:
- Reduce capital gains taxes.
- Give without affecting your monthly budget.
- Increase the amount you have available for charitable donations.
With the right strategy, investment growth can become a powerful tool for generosity, helping you support the causes you care about while stewarding your resources wisely. At CCF, our team is available to answer any questions you may have about donor-advised funds and strategic, impactful giving. Reach out to us today at 901-682-6201 to learn more!