Tax-smart charitable giving strategies | Vanguard

Giving cash vs. donating appreciated shares

Donating cash to a charity is easy. But it’s often much better to donate appreciated securities to charities, either directly, through donor-advised funds (DAFs), or through a foundation. Giving appreciated stock you held for more than 1 year helps both your favorite charities and yourself. In addition to your charitable deduction on the value of your gift, you wouldn’t pay the capital gains tax on the appreciation of the securities, maximizing your gift. It’s a better bang for your buck. Take hypothetical married couple, Jack and Jill Golucki, for example. The Goluckis want to donate $10,000 to their favorite public charity. They happen to own a stock fund worth $10,000 with a $2,000 cost basis. As the table below shows, if they sell the fund and contribute the proceeds, they’ll pay $2,000 in capital gains taxes (ignoring Medicare Surtax and state taxes). But if they contribute the fund in kind to the charity, they’ll pay no taxes on the appreciation and receive a charity deduction (a twofer.)