Did you know that you can make a bigger impact by donating stocks directly to charity?
Compared to donating cash or contributing the after-tax proceeds or selling your appreciated securities, you might be able to automatically increase your tax reduction. Donating stock, instead of cash can be hugely beneficial to both the parties involved. You’ll find that most charities, schools, hospitals, and non-profit organizations readily accept stock as a donation.
Here are some of the primary benefits of donating stocks to charity –
- You’ll be able to give more
If you donate stocks that have been appreciated for over a year, you’ll actually be giving 20% more than if you had sold the stock and then made that same cash donation.
- You’ll potentially reduce future capital gains
Most investors have stocks that they love dearly and want to hold onto for the long term because they believe that stock will have substantial gains. If you make stock donations of some of those shares, it’ll reset your cost basis and reduce your future capital gains tax exposure.
- Donate stocks without headaches
Some people might not be interested in donating stocks as they feel it’ll require a lot of paperwork, but most charities easily accept stock donations and take the hassle off your hands.
Donating stocks instead of donating money is a smart choice because it benefits not just the charity but the donor as well. The charity receives a bigger amount and the tax isn’t deducted while the donor also feels the peace of mind because their whole amount reaches the charity. The donor also receives the full amount in tax benefits.