You know how sometimes you just want to tell people what to gift you, so you don’t end up with the same slippers or socks as you did the last time? We’re here to let you, our community supporters and advocates know about a really great one that charities love! It fits in any size box, can be used to help fund any number of incredible programs, and might be a great gift for YOU as well!Gifts of Stock? Yes, please!
One of the most tax-effective ways to make a charitable gift to your favorite organizations (like United Way of Central Minnesota) during your lifetime is to use appreciated stock. If you have held a stock for more than a year, you can donate it to UWCM and receive an income tax deduction for the value of the stock at the time of the gift. Such a gift avoids any capital gain you might have realized if you had sold the stock.
For example, if you bought a stock of $2,000 ten years ago and it is currently worth $10,000, you will have a capital gain of $8,000 if you sell it. However, if you donate the stock to UWCM, you receive a $10,000 charitable income tax deduction and realize no capital gains.
It is important to remember that you must donate the stock to UWCM before selling it. A simple way to donate stock held in an investment account is to have your investment advisor transfer it directly to an investment account of UWCM. If the stock is represented by a certificate, you will need to endorse the certificate and deliver it to UWCM.
‘We have chosen to gift stock because it allows us to support a wonderful organization like the United Way of Central MN while avoiding paying tax on the gains of a highly appreciated security. Also, with portfolio construction in mind, it helps us reduce an allocation to a specific security.’
– Brian and Sara Zimny, United Way of Central Minnesota advocates and gift of stock donors
Timing is everything!
It is also important not to wait until the last minute to make a gift of stock. The gift of stock represented by a stock certificate is completed when the endorsed certificate is physically delivered to the charity or when it is deposited in the mail.
However, most people own their stocks in brokerage accounts. The gift of stock held in a brokerage account is not effective until it is transferred to (and appears on the books of) the brokerage account for the charity. Since it may take a few days for the brokerage companies to process the transfer of stock, it is best to initiate your stock transfer at least a week before the end of the year. Two weeks would be even safer to assure that your stock gift is credited for the current tax year.
The staff at United Way of Central Minnesota would be happy to help you make a gift of stock.
Want to learn more about planned gifts? Visit our website to see if it's right for you.
Written by Brad Hanson, Attorney, Quinlivan & Hughes, P.A. and United Way Planned Giving Committee Member