October 5, 2022

Unitranche

Supportive Business Potential

Viewpoint: Give generously with gifts of stock

Rebecca Elzey

For those who are philanthropically inclined, writing a check can be a quick and easy way to support a cause. But it’s not the only option.

Donating stock (public securities) directly to charity is one of the most tax-wise ways to make a difference. Yet too often donors who own appreciated assets – including stocks, mutual funds or bonds – overlook this avenue.

A meaningful option with numerous benefits, making a gift of stock is a common strategy familiar to investment managers and brokers. Your trusted financial advisor should be ready to guide you through this process of determining what stocks in your portfolio could make the best gift. The Delaware Community Foundation can also be a partner to help maximize your charitable impact.

Some donors may not want to pursue donating stock because they think it will be a complicated process with lots of paperwork. However, donating stock can actually be a seamless process that opens doors to advantages.

As an asset, stock has the power to offer real financial support. However, as part of an investment portfolio, stocks likely are not considered part of day-to-day finances. This means the donor could make a larger gift than imagined without it impacting their monthly living expenses.

Additionally, a winning aspect of stock is that it continues to appreciate over time, growing and growing beyond that initial investment. The longer a stock is held, the more it has appreciated – and the higher the capital gains taxes will be if sold by the individual. Gifting stock, rather than selling, avoids this, because the receiving charity does not pay taxes on the capital gains when the stock is sold.

DCF’s philanthropic expertise can help donors if they are concerned their chosen charity may be unable to easily accept a gift of stock or they hope to support multiple causes. Donors can make an impact through a gift of stock by giving to an existing fund or establishing a donor advised fund (DAF) or another type of fund through the DCF.

A DAF is a charitable fund established with the sole purpose of supporting charities forever. Instead of donating multiple blocks of stock to multiple charities, donors make one donation into a DAF and typically realize immediate tax advantages.

And donors need not worry about making decisions regarding which charities to support right away. Donating stock to a DAF allows you to take a deduction for the current tax year and then support as many charities as you would like over time. What’s key in creating a DAF is making the required establishing gift, oftentimes easier when accomplished through a large gift of stock than a gift of cash.

Talk with your trusted financial advisor today to discover how a gift of stock could benefit you and the causes close to your heart in partnership with the Delaware Community Foundation.

Rebecca Elzey is the senior philanthropy officer at the Delaware Community Foundation.