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Stocks phone script: The benefits of stock giving
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Stocks phone script: The benefits of stock giving

There are many benefits of giving stock — even during a down market. Explore how stock giving can help both donors and nonprofit organizations. Then download our phone script for a sample of how you can speak to your organization’s donors about the mutual benefits of stock giving.

Donating stock: Benefits for donors

For donors with appreciated stock, there are three key benefits to making a direct stock donation:

1. Donors save on taxes.

By donating stock rather than selling it, donors avoid paying a capital gains tax. A capital gains tax is a tax on the profit made from the sale of a non-inventory asset like stock. Depending on the filer’s marital status and income, the federal minimum for a capital gains tax is as high as 20% on long-term holdings (for example, stock held for more than one year).

2. Donors can take charitable deductions.

If they donate long-term holdings (stocks held more than one year) and itemize deductions, donors can take a charitable deduction for the stock’s fair market value on the day they give it away.

3. If their stock is currently at a higher value, donors can decrease future capital gains by donating stock and buying new shares.

This resets the donors’ cost basis at the current, higher price and thus decreases their future capital gains difference as the stock grows in value.

There are still benefits to giving stock in a down market

Contrary to what donors may think, donating stock during the down market is still an impactful way to give — and can still benefit the donor. Here’s why:

  • Most donors have appreciated assets. No matter the state of the market, most donors did not buy stock at the peak of its value, and some of their assets have appreciated over time. The benefit of donating that stock and avoiding capital gains tax still holds, and can be an appealing gift option in a moment of financial upheaval.
  • Donors can give stock without changing their portfolio. After donating stock, donors are eligible to buy the same stock again within the day. This allows donors to make a powerful, tax-savvy gift while maintaining their stock portfolio, no matter the market.
  • When giving stock, donors are exempt from the “wash sale” rule. This is important when giving stock at a loss. If they were to sell that stock, rather than donate it, the wash sale rule requires a 30 day period before they can repurchase that stock. This rule exists to keep people from selling at a loss, deducting the capital loss on the sale against the capital gain, and then immediately repurchasing the stock to maintain their holding. No such rule applies to stock donations.

Donating stock: Benefits for nonprofits

1. You are tapping into resources that already exist, and educating donors in the process.

Many donors have appreciated assets, but aren’t aware of the benefits of donating them versus making a cash gift. A 2016 study from Fidelity Charitable showed that 80% of donors own appreciated assets, such as stocks, mutual funds, or bonds, but only 21% of those donors have given these types of assets to charity.

2. You are offering donors a new, tax-savvy way to support your work.

By letting donors know about the benefits of stock giving, you are communicating to them that you have their interests at heart, just as they have yours, and helping them save on taxes in a moment when many are in the midst of financial upheaval.

More resources on donating stock

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