Thinking About Donating Your Stock to Charity?

By Darrell Grant on June 20, 2025

Doing so is a powerful tax strategy to optimize your charitable giving

For investors seeking to support charitable causes while maximizing their tax benefits, donating stock instead of cash can provide significant advantages. By contributing appreciated securities to a qualified charity, investors can potentially deduct the full fair market value of the donated stock on their federal income tax return.

Here are a few reasons why donating stock can deliver more “tax bang for the buck” compared to cash donations and how you can leverage this strategy to optimize your charitable giving.

The Tax Advantage of Donating Stock

One of the key benefits of donating appreciated stock to charity is the ability to write off the full fair market value of the donated securities on your federal income tax return. This differs from cash donations, where the deduction is limited to the amount contributed.

Capital Gain Tax Considerations

When investors sell appreciated securities, such as stocks, mutual funds, or other capital assets, they are typically subject to capital gains tax on the profit earned. However, by donating these appreciated assets directly to a qualified charity, investors can potentially avoid paying capital gains tax altogether.

Maximizing Tax Savings

By donating appreciated securities instead of cash, you can unlock two significant tax benefits:

Deducting the Full Fair Market Value: When donating appreciated stock, the donor is eligible to deduct the full fair market value of the securities on their federal income tax return. This means that the deduction is based on the current value of the stock, not just the initial purchase price. As a result, you can potentially claim a larger tax deduction, thereby maximizing their tax savings.

Eliminating Capital Gains Tax: By donating appreciated securities directly to a qualified charity, you can bypass the capital gains tax you would have incurred if you had sold the stock first. This can result in substantial tax savings, especially for individuals with significant capital gains.

Charitable Giving Strategies

To make the most of donating stock to charity and maximize tax benefits, affluent investors can consider the following strategies:

Support What You Care About

Identify High-Appreciation Securities: Look for stocks or other capital assets that have experienced significant appreciation since their purchase. By donating these securities,you can leverage the higher fair market value to increase your tax deduction.

Research Eligible Charitable Organizations: Ensure that the charity you plan to donate to qualifies as a tax-exempt organization under the IRS guidelines. This ensures that your donation is eligible for the tax benefits associated with charitable contributions.

Timing Donations Strategically: Evaluate your tax situation and coordinate the timing of your stock donations with your overall tax planning. It may be advantageous to donate appreciated securities in years with higher taxable income to offset potential tax liabilities.

Seek Professional Advice: Given the complexities of tax laws and individual circumstances, it is prudent to consult with a qualified tax advisor or financial planner who can provide personalized guidance tailored to your specific situation.

Support What You Care About

Donating stock to charity instead of cash offers investors a powerful tax strategy for optimizing their charitable giving.

With careful planning and professional guidance, you can effectively navigate the tax landscape, reduce your tax liabilities, and support your philanthropic initiatives you care about most.

This Week in Music History

June 23

• 1979 – The Charlie Daniels Band release “The Devil Went Down To Georgia.” Daniels plays the fiddle parts for both Johnny and the Devil; he says the Devil part is “just a bunch of noise.”

June 24

• 1966 – The final Beatles world tour begins in Munich. Moving forward, they concentrate on studio efforts, resulting in the landmark album Sgt. Pepper’s Lonely Hearts Club Band.

June 25

• 1993 – Nora Ephron’s romantic comedy Sleepless In Seattle, starring Tom Hanks and Meg Ryan, opens in theaters. With songs from Louis Armstrong, Nat King Cole, and Harry Connick, Jr., the movie spawns a hit soundtrack and renews interest in standards. The film opens with Jimmy Durante’s rendition of “As Time Goes By,” a song made famous in the classic film Casablanca. It also features a country classic: Tammy Wynette’s “Stand By Your Man,” used in a scene where Meg Ryan is pondering her romantic allegiance.

June 26

• Thanks to Dooley Wilson’s rendition as piano-playing Sam in Casablanca, Rudy Vallee’s 12-year-old version of “As Time Goes By” lands at #1 on the charts, where it stays for four weeks.

June 27

• 1970 – The group Smile change their name to Queen and perform for the first time under that moniker. The gig takes place at Truro City Hall in Cornwall, England; the band earn £50 for their efforts. It’s lead singer Fred Bulsara’s first paid performance with the band, which also includes guitarist Brian May and drummer Roger Taylor. The name change is his idea: “Queen” evokes royalty, and has many possible interpretations. Long after adopting the stage name Freddie Mercury, he says, “I was certainly aware of the gay connotations, but that was just one facet of it.” The following year, bass player John Deacon joins the band, establishing the lineup that persists until Mercury’s death in 1991.

June 28

• 1975 – David Bowie releases “Fame,” featuring John Lennon on backing vocals. It become Bowie’s first #1 hit in the US.

Brian M McGraw, CPWA®, CFP®

Senior Wealth Advisor

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