Bald Head Island Conservancy

The Gift of Stock

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The gift of stock to a non-profit organization is an increasingly popular way to give back.  The Bald Head Island Conservancy spoke to First Citizens Bank in Wilmington to learn more about this growing trend.

Can you explain the process of gifting stock to a non-profit as a donation?

A donor should first speak to his/her asset manager and/or tax advisor to determine the appropriate amount of the donation and the best stock(s) or mutual fund(s) to transfer. 

A donor who wishes to make a stock transfer to a charitable organization should contact the organization for transfer instructions. This is significant for technical reasons, but it also gives the organization the cue to let its asset manager know the contribution is on its way, and makes it simpler for the organization to receive and acknowledge the gift. The donor then delivers the instructions to its asset manager along with directions on what number of stock shares or mutual fund units to transfer to the nonprofit. Most stock transfers are now handled electronically, but the process can take several days to complete. A transfer of mutual fund units can take an additional time to complete.

A donor can also transfer a physical stock certificate to a nonprofit. In this case, the donor will need to execute a stock power. It is important to know that a stock certificate and a stock power should never be mailed in the same envelope, they should always be mailed separately, and they should always be insured and demand a confirmation of delivery.

Are there any benefits to the donor to give the gift of stock?

Yes. The gift of stock to a qualified charitable organization will usually result in a charitable deduction for the donor in the year of contribution, and eliminate any potential capital gain if the stock appreciated in value during the period it was held by the donor. There are complicated rules around charitable deduction carryover, so it is important to consult your tax advisor to create an appropriate gifting strategy.  Gifting appreciated property typically provides the donor more tax advantages than a gift of cash.

How much of a stock donation is tax deductible? 

It depends. The amount of the charitable deduction available to the donor will depend on his/her adjusted gross income in the year the contribution is made, the value of the stock at the time of the contribution, how long the stock was held by the donor, and the type of charitable organization to which the stock was contributed. The donor should consult his/her tax or investment advisor for the specific tax implications of the donation.

Does the non-profit have to pay a tax on the stock donation

No. If the charity sells the stock and uses the funds to further its charitable purpose, the charity won’t pay tax on the gain from the stock sale.

 Your First Citizens Partner can help you with any of these philanthropic decisions.


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