A recent article by the New York Times linked to below says that many investors are looking for ways to reduce their tax profiles by moving income to current years and selling stocks that have locked in capital gains. Instead of selling those stocks, and investor looking to limit his tax profile might wan to consider donating the same stock to a non profit organization. As a matter of fact, if tax rates for capital gains do go up, then stock donations become even better tax savings vehicles. Instead of selling the stocks and paying capital gains, one can donate the stock and avoid capital gains tax altogether! Of course, you would have had to hold the stock for over a year and other tax restrictions might apply (ask your CPA).
Overall, investing in stocks is a nice way to increase your wealth. Donating those stocks is a nice way to avoid paying heavy capital gains taxes come year end.
Here are step by step instructions on how to add a “Donate Stock” button to your website to enable donors to donate stock directly to your website:
To accomplish this, first you must open and create a Stock Donator Account. Then:
1. Login to your Stock Donator account
2. From your home page, you’ll notice five tabs across the middle of your screen (e.g., ‘Mission Statement / Logo’, ‘Liquidation Preference’, etc.)
3. Click on the far right tab labeled ‘Website Widget’
4. Highlight the html script within the light grey shaded box.
5. Copy the script (Ctrl + C)
6. Paste in the appropriate area within your website’s HTML. Feel free to edit the appearance of the button to be consistent with your page’s branding / look and feel etc.
viola! You’re ready to start accepting stock donations from your website!
Mitt Romney gets a lot of credit for the amount of money he has given away — as he should. No one has to give any money away, so the fact that some people choose to do so is admirable.
In 2010, Mitt Romney took $3 million in charitable deductions on his tax return, against adjusted gross income of $22 million.
- $1.5 million was a direct cash donation to the LDS Church
- $1.5 million was a stock donation to the Romney’s private foundation, which is called the Tyler Foundation. The Tyler Foundation, in turn, gave away $647,500 in 2010, of which $145,000 went to his church.
Stock Donations peak around December. Non-profit organizations that are looking to get a leg up on receiving fundraising dollars should be looking to prepare for receiving stock donations starting now! The process is very simple with Stock Donator. Open an account online for free and you can be ready to receive stock donations within 24 hours after going through our approval process.
As December is nearing, make sure you are doing everything you can for your non-profit or 501(c)3 which includes preparing for a flood of incoming Stock Donations with Stock Donator.
Stock Donations made to qualified organizations may help reduce the amount of tax you pay.
The IRS has eight essential tips to help ensure your contributions of Stock Donations pays off on your tax return.
1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property.
5. There are special rules for determining fair market value of stocks.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given. Stock Donator maintains these records for you if you maintain a stock donator account.
7. To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. Stock Donator maintains these records for you if you maintain a stock donator account.
8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser. This rule does not apply to Stock Donations.
Many larger non profit organization have been accepting stock donations for many years. Nancy Munger donated 25 shares of Berkshire Hathaway stock to the Henry E. Huntington Library and Art Gallery. The dollar value of the donation is close to $3 million. (see article). Warren Buffett also chooses stock donations as his favorite method of donation and recently donated $42 Million to charities via stock donations.
But what about the smaller organizations? They don’t have the necessary infrastructure to be able to accept stock donations. Until now. Stock Donator levels the playing field. Now smaller non-profits can accept stock donations online without having to worry about the process involved in opening a brokerage account, checking the brokerage account, account maintenance fees, and worrying about donation receipts. A stock donation can be processed by Stock Donator and the organization receives one check.
Non profits have a lot of work to do. People often underestimate the amount of time and effort required to run a non-profit. Much of a non-profit’s time and effort might be spent on mundane paperwork and processes that distract the organization from the true good work they are doing.
Take for example a simple stock donation. If a non-profit has a donor who is willing to make a stock donation, that non-profit will have to take the following steps in order to accept a stock donation:
1. open a brokerage account (if they don’t have one already). Which involves researching which brokerage firm is most convenient and has the least fees and will probably involve making visits to the branch to sign papers.
2. send the brokerage account information to the donor
3. send the donor the correct stock transfer form
4. from the date the form is sent to the donor, to the date the stock is received by the non-profit, the organization will have to continuously check their brokerage account for the stock to appear.
5. the non-profit will then have to prepare a receipt and figure out what the correct cost basis of the stock is.
6. the non-profit will then sell the stock and transfer the cash from the brokerage firm to their bank account.
Sometimes, a non-profit will have to go through all these 6 steps to receive a small donation of a few hundred dollars. And for each donation, they will have to repeat the cumbersome steps above. Sometimes the hourly rate which they pay a person to deal with the above process will be more expensive than the proceeds of the donation they received!
Using stockdonator, the only step required for the non-profits are:
1. Open a Stockdonator account
2. Place a stockdonator button on their website!
after these 2 steps, anytime a donor makes a donation, all the non-profit needs to do is cash a check they receive in the mail. Simple and easy. The small fee they pay more than makes up for the increase in productivity.
The non-profit does what they do best, and stockdonator takes care of what it does best – making stock donations an automated, online process.
Stock Donator is focused on providing non-profits and other organizations with an easy and efficient way of accepting stock donations. Donors may open accounts free and receive a cross-branded website which will allow them to accept stock donations from donors within a day.
Donating stock online has never been easier. Sign up your organization today to allow your donors to donate stock online to your organization.
A donor-advised fund is a charitable giving vehicle administered by another entity and created for the purpose of managing charitable donations on behalf of an organization, family, or individual.
A donor-advised fund requires the donor to set aside a certain sum of money that may be invested in stocks, and later, if the stocks appreciate in value, they can donate those stocks without worrying about capital gains taxes.
The good thing about donor advised funds is that, when they increase in value, the donor gets to claim a tax deduction that was larger than their cost basis.
THE BAD THING about donor advised funds, is that when the portfolio is down, the donor will claim a smaller deduction that their cost basis. AND DONOR ADVISED FUNDS CHARGE FEES TO DONORS! You pay for someone else to control your portfolio and you lose control of donating only the winning stocks.
With Stock Donor, you don’t need to donate until you have a gain! Your portfolio remains solely under your control ! Therefore you can always donate and receive a deduction that is larger than your cost basis! Also, donors NEVER have to pay Stock Donator a fee for using our service. 100% of the FMV of the tax donation will belong to the Donors!
Open a Stock Donator account today and start donating stocks to charities the fast, easy and secure way.
Kimberly Lankford, Contributing Editor at Kiplinger’s Personal Finance describes howA When giving a gift, how your investment has fared will make a big difference on your taxes.
She says that the bigger the capital gains, the more advantageous it is to donate stock over cash. A That is in agreement with our Stock Donator Calculator.
She also says that before a donor gives away stock, they should first make sure the charity is set up to deal with the gift. Some small charities don’t have brokerage accounts and may have a tough time selling the stock or mutual funds.