How to Make Sure Your Charitable Stock Donation Goes Smoothly

For investors who want to have a positive impact in the community, stock market rallies and year-end bring an opportunity to donate appreciated assets to your favorite charity. In addition to making a difference for the receiving charity, donating such assets provides you with tax benefits.

People most frequently donate common stock. If the stock you choose to donate has increased in value since you purchased it, you will not have to pay capital gains taxes as you might if you had sold the stock to donate cash. Also, if you itemize, you may be able to take the current value of the stock as a charitable deduction.

For a donation to be properly completed, the mechanics behind the scenes must also be executed properly. Financial institutions implement the operational movement of the security. Here are some tips to help a stock donation go smoothly:

As the donor

1 – Prior to initiating the donation, contact the charity to verify current instructions, which will include transfer information for the charity’s account at the receiving financial institution. Notify the charity of your intent and give them the following details about your specific donation:

• Name of the stock
• Number of shares
• The financial institution that will be sending the shares (where your investments are held, e.g., Mission Management & Trust Co.)

2 – Provide your financial institution with the instructions received from the charitable organization and ask what else may be needed to proceed with your requested donation. Normally, there will be a transfer form to complete and sign.

As the charity

1 – Contact the financial institution that holds your investments to let them know of the expected donation, and provide:

• Name of stock
• Number of shares
• The financial institution that will be sending the shares

When the above steps are not taken, there is a significant chance that the donation process will break down and the attempted stock donation will be rejected. By informing your charity of your intent and asking the charity to notify its financial institution of the details of your gift, you can ensure that your donation goes smoothly.

The donor’s gift value is determined on the date that the charity receives the stock, so timing can play an important role. Operational rejections result in delaying completion of the donation. You should receive a donation receipt directly from the charitable organization.

As always, consult your tax advisor if you have questions or concerns related to this topic.

By Cynthia Sprague, Vice-President, Director of Operations