Turn your clients’ highly appreciated securities into charitable assets

Christmas will be here soon, and most all of us have a variety of causes in mind for our year–end giving. You may be tempted to simply write checks to charities, but giving appreciated stocks and mutual funds is an especially smart move to consider right now.

Despite the recent market volatility, you likely have money in taxable accounts that has produced some significant unrealized capital gains, which will eventually result in a hefty tax bill. But by donating securities that you’ve held for at least one year, you can reduce or eliminate capital gains taxes and claim the full market value of the security as a charitable deduction for 2018.

Donating non–cash assets is always a smart alternative to making cash donations, especially now with current market valuations.

And with the ease of donating stock through their Giving Funds (donor-advised funds or DAF), many NCF givers have taken advantage of this smart giving strategy. In 2018 alone, NCF accepted more than $311 million in stock gifts.

If donating stock this year sounds like a smart option for you, here are a few things to keep in mind:

  • You can give now, grant later: The beauty of a Giving Fund with NCF is that you can transfer shares now, in order to take advantage of the year–end tax deduction. But you have unlimited time to decide which charities to support. Stewart Welch, a financial planner and Founder of the Welch Group, based in Birmingham, Alabama, explains his approach: “I strive to give away 10 percent of my income annually but, typically, I haven’t decided on the exact amounts or charities.” In order to get the tax deduction this year, he contributes to a DAF, like a Giving Fund at NCF. With this strategy, he gets the deduction at the time of the gift, but he can take his time choosing the charities, and the Giving Fund holds and invests the money until he’s ready to recommend grants.
  • Don’t wait until the last minute: To transfer securities to your Giving Fund, most banks and brokerage firms require a letter of instruction or letter of authorization and a mutual fund company may have a special form. So it’s a good idea to start the process as soon as possible, so the transfer has plenty of time to be completed during the holidays.

Log into your Giving Fund to start the process online or download our stock and mutual fund transfer forms.

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