Giving Compass' Take:
- Andrea Young argues that donating appreciated stock benefits donors and nonprofits alike and greatly helps those who depend on the philanthropic community.
- Why do so few donors give stock? How can donors and nonprofits raise awareness about how donating stock is a great way to give?
- Read about giving more effectively.
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Opportunity may be knocking louder and harder than ever before for committed nonprofit organizations and the generous donors who are their lifeblood. Since bottoming out at the outset of the coronavirus pandemic on March 23, 2020, U.S. markets have staged a relentless rebound, with the S&P 500 ripping off a one-year advance of 76 percent, and the NASDAQ soaring a stunning 95 percent over the same period. For investors, that has resulted in hundreds of billions of dollars in as-yet-unrealized capital gains. Now, a substantial increase in the capital gains tax rate for top earners appears likely to happen.
This combination of events is likely to result in higher-income investors actively seeking out tax mitigation strategies. And donating appreciated stock and mutual fund shares offers a highly effective way for them to not only reduce their taxes, but to give more to the causes and communities that are important to them.
Let’s take a closer look at how it works, starting with the tax benefits. As with most charitable contributions, donors are able to deduct the full fair market value of their gift from their taxable income. But perhaps even more compelling, especially with higher capital gains tax rates on the horizon, is the opportunity to avoid paying the long-term capital gains taxes – which apply to investments held for more than one year – that would be due if they simply sold the stock.
Read the full article about donating appreciated stock by Andrea Young at Charity Navigator.