Contributing appreciated securities-such as stocks, bonds, and mutual funds-is a powerful way to support NARSOL’s Foundation while maximizing your tax benefits. Here’s how this giving option works, why it’s so effective, and how you can make your gift.
Why Donate Appreciated Securities?
Donating securities that have increased in value since you acquired them offers unique advantages over giving cash:
- Avoid Capital Gains Tax: When you donate appreciated securities directly to NARSOL’s Foundation, you bypass the capital gains tax you would owe if you sold them first. This means the full market value of your asset goes to support our mission, and you don’t pay taxes on the appreciation.
- Receive a Charitable Deduction: You may be eligible for a charitable income tax deduction for the full fair market value of the securities, provided you have held them for more than one year.
- Increase Your Giving Power: Because you avoid taxes and claim a larger deduction, you can often make a more significant gift than if you sold the assets and donated the proceeds.
How Does It Work?
- Identify Eligible Assets:
You can donate publicly traded stocks, bonds, or mutual fund shares that have appreciated in value and that you’ve owned for at least a year. - Initiate the Transfer:
- Electronic Transfer: The most common and efficient method. Your broker can transfer the securities directly to NARSOL’s Foundation’s brokerage account.
- Physical Certificates: If you hold paper certificates, you’ll need to mail the unsigned certificates and a signed stock power (in separate envelopes) to the Foundation.
- Mutual Funds: Contact your mutual fund company for specific instructions, as the process may vary.
- Valuation and Tax Documentation:
- The value of your gift is determined by the average of the high and low prices on the date the transfer is completed.
- You’ll receive an acknowledgment for your records, and you may need to complete IRS Form 8283 for your tax return if your gift exceeds certain thresholds.
Example: The Power of Donating Appreciated Stock
Suppose you purchased stock for $2,000, and it’s now worth $5,000. If you sold it, you’d owe capital gains tax on the $3,000 gain. At a 20% tax rate, that’s $600 in taxes, leaving $4,400 to donate. By donating the stock directly, you avoid the tax, NARSOL’s Foundation receives the full $5,000, and you can claim a $5,000 charitable deduction.
Key Points to Remember
- Hold for More Than One Year: To maximize your deduction, only donate securities you’ve owned for over a year; otherwise, your deduction is limited to your cost basis.
- Deduction Limits: You can generally deduct up to 30% of your adjusted gross income (AGI) for gifts of appreciated assets, with any excess carried forward for up to five years.
- Consult Your Advisor: Tax rules can be complex. Speak with your financial or tax advisor to ensure this strategy fits your goals and circumstances.
Ready to Make a Gift?
Contact NARSOL’s Foundation for transfer instructions and to ensure your gift is processed smoothly. Your contribution of appreciated securities can make a lasting difference-while providing you with valuable tax savings.
Giving appreciated stocks, bonds, or mutual funds is a win-win for you and for NARSOL’s Foundation: you support a cause you care about and make the most of your charitable dollars.