Charitable Giving: Enriching Communities and Lives in So Many Ways

Giving to charities is heartwarming.?Whether it’s providing services to those in need, supporting educational enrichment, the arts, or other organizations, charitable giving is invaluable to our communities and our lives.

Have you ever thought how giving to charities may improve your financial situation??Many people think of charitable giving as cash donations.?This can be a huge mistake, especially if they hold securities with unrealized long-term gains.?Donating appreciated stock is a cashless transaction that can have tax benefits to the donors.?

A tax-efficient way of funding your charitable goal may be donating appreciated stocks.??When you contribute an appreciated asset to charity, you avoid the capital gain on the growth of the stock.?You are entitled to a charitable deduction equal to the fair market value (FMV) of the asset on the day it is contributed up to the maximum amount allowed.?Currently, the maximum charitable deduction allowed for the donation of appreciated assets is equal to 30% of a taxpayer’s adjusted gross income (AGI).??You should remember charitable deductions are only useful to the extent they allow your itemized deductions to exceed the applicable standard deduction. Remember, when gifting appreciated stock you must have owned the stock long-term meaning more than one year.

It’s clear that donating long-term appreciates securities is a more tax-efficient way to donate to charity, yet very few taxpayers, utilize this strategy. It may be because donors do not realize they can contribute securities to charity or because they want to continue to maintain their current holdings.?If you wish to continue to own the stock of a particular company, you can utilize the cash that you would otherwise be donating to charity to repurchase the stock at the current fair market value.?This effectively generates a charitable deduction and avoids a taxable event, yet allows you to reestablish your desired position at a higher cost basis, allowing you to continue participating in growth and dividend.

While contributions directly to a charity are certainly an option, there are additional charitable giving strategies that work well with high appreciated stock positions.?These strategies may include donor-advised funds, or charitable remainder trusts.?Although they all provide both income tax and estate tax benefits, each of these strategies is unique.

Giving back is an incredibly rewarding experience.?Integrating your philanthropic objectives into your overall investment plan may be a strategy to improve your financial situation.

Stifel does not provide legal or tax advice.?You should discuss your particular situation with your professional legal and tax advisors. ?

Article provided by Bryan A. Ruder, CFP?, MSPFP, CRPC?,AWMA?, AAMS?, AIF?, MPAS?, a Financial Advisor with Stifel, Nicolaus & Company, Incorporated, Member SIPC and New York Stock Exchange, who can be contacted in the Evansville office at (812) 475-9353 or (855) 62-RUDER