What are the benefits of giving appreciated stock to a donor-advised fund if I don’t plan to itemize my deductions this year?
By Kimberly Lankford, Kiplinger
Giving appreciated stock to a donor-advised fund — or directly to a charity — gives you a tax benefit even if you don’t itemize. By doing so, you avoid having to pay taxes on the capital gains that have accumulated through the years. But if you sell the stock and write a check to the charity instead, you’ll have to pay capital gains taxes.
(If the stock has lost money, however, it’s usually better to sell it first and then write a check to the fund or charity, so you can benefit from the capital loss.)
Giving appreciated securities to a donor-advised fund rather than directly to a charity will make it easier to spread your contributions to more charities over a longer time period. You can make your contribution now, then have an unlimited amount of time to decide which charities to support.
You technically “recommend” that the donor-advised fund make the grants to the charities, but grant recommendations are generally approved as long as the charity is an eligible 501c3 organization (the IRS designation for a tax-exempt charitable organization). You can usually make grants to charities that are as little as $50 or as large as your account balance.