Strategic Generosity

Making a gift of stock or mutual funds now, locks in the gains and maximizes a gift to your church. The advantage is not having to pay any capital gains tax on the gift of stock. The 2021 stock market returns are in the double digits, with many portfolios up over 20%! These excellent returns offer wonderful opportunities for planning gifts in 2022.

Let’s look at how this works. Debbie Donor is planning to write a check of $5,000 to her church this year. Because her stock portfolio has appreciated $30,000, her financial advisor suggests making a gift of stock rather than using her cash. Debbie contacts the Foundation to make a $5,000 gift of stock, and consequently, can now use the $5,000 cash to purchase more stock which will increase her cost basis. This strategy will also lower her capital gains tax if she decides to sell stock in the future.

An alternative option for her is to open a Donor Advised Fund (DAF) at the Foundation. She can then gift the $30,000 of appreciated stock to her DAF. This large donation makes her eligible for a 2022 tax-deduction. Over the next few years, Debbie can make annual grants from her DAF that will benefit her church and the other charities she loves to support. It is never too late to find a solution that works for you while benefiting that which you care about.