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World Relief Planned Giving - Tim Maurer

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Gifts of Stock: A Wise Move?

The tax benefits of donating appreciated stock are two-fold, including deducting the amount of the charitable donation and escaping the unrealized gains on the donated stock. That’s because the deduction is equal to the asset’s current fair market value. This double benefit makes donations of appreciated stock a particularly attractive move for donors.

Donating stock that has appreciated in value to charity is an effective and tax-efficient way to support causes like World Relief. But it’s important to understand how the process works. Let’s look at an example of two donors whose stock is identical in value:

  • Donor A purchased stock for $100, and it has grown to be worth $110. He donates the stock directly to World Relief.
  • Donor B purchased stock for $100, and it also is now worth $110. He sells the stock and then donates the money to World Relief.

Are these donations equivalent? No.

Donor A can claim a charitable donation for $110. Also, World Relief can sell the stock for $110 and end up with the full $110.

However, Donor B’s stock sale triggers capital gains tax. His stock investment has a capital gain of $10; if his capital gain tax rate is 30%, that tax reduces the value of his asset to $107.

Red Flags: When Donating Stock is a Bad Move

There are two cases where donating stock is not advantageous to the donor (or the charity).

First, if the stock has been held for less than a year, donating it may not be a good idea. The charitable deduction for such a donation is limited to the stock’s cost basis (and not what it’s worth now).

Second, donating stock that has not appreciated in value can be problematic for the donor. For such stock, you would be better off selling the asset and giving the proceeds to charity, while also claiming the capital loss.

Let’s Discuss YOUR Charitable Priorities

Tim Maurer

Tim Maurer, World Relief's Planned Giving Advisor

Tim is a financial planner, educator and author. As Vice President at the Financial Consulate, a fee-only comprehensive financial management company, he is a Certified Financial Planner™ (CFP®) practitioner working with individuals, families and organizations. A graduate of Towson University, Tim now teaches financial planning at his alma mater. Tim’s second book, co-authored with best selling author, Jim Stovall, is published by John Wiley & Sons under the title The Ultimate Financial Plan: Balancing Your Money and Life. He also writes for Forbes.com.

With a passion for relational communication, Tim educates in a variety of forums. He has been active in television, including appearances on CNBC, ABC’s Nightline, WUSA Channel 9 (CBS in DC), WBAL-TV (NBC in Baltimore) and Fox 45 (in Baltimore). On the radio, he joins Drew Tignanelli each week as the co-host of Money, Riches & Wealth, a financial radio program on WCBM 680 AM in Baltimore each Wednesday at 6:00pm, and has also been featured on the NPR program, Marketplace. In print, Tim has been quoted in The Wall Street Journal, The Washington Post, The New York Times, The Baltimore Sun, Kiplinger’s Personal Finance, U.S. News & World Report and Money magazine, among others.

Tim is a husband and father first and lives in Baldwin, Maryland where he and his wife, Andrea, are the proud parents of two boys, Kieran and Connor, and are active members of their community. Outside of personal finance, Tim’s favorite pursuit is music, and he plays the drums and sings in the indie-bluesy-jazzy-rock band, the Jon Maurer Band. He is also part of a group dedicated to serving the second poorest country in the Western hemisphere, Nicaragua, through micro-finance and entrepreneurial ventures.

If you have any questions about your planned giving options please contact Tim.

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