PUBLICLY TRADED SECURITIES
Publicly traded securities are the most common form of non-cash
charitable gifts. Securities are attractive assets to give because
they are often highly appreciated, easily transferred, and in most
cases, easily valued for deduction purposes without the need for
a formal appraisal. The most common forms of securities are shares
of stock, bonds, and shares of mutual funds.
The typical donor:
- Holds securities that are highly appreciated in value.
- Holds publicly traded securities.
- Wants to transfer securities prior to sale.
Gifts features and benefits:
- Immediate income tax deduction.
- Deduction based on fair market value.
- Avoidance of capital gains taxes.
- Gift can be timed to match changes in the market.
How To Make a Gift of Securities
How you proceed depends on how your individual securities are
held. If you hold the securities in your possession, they may
be sent directly to the Foundation. If the stock, bond, or mutual
fund share is held in a brokerage account, you will need to work
with your broker to complete the transaction. It is important
that you send the certificate under separate cover from the stock
power. The stock power must have a medallion signature guarantee,
which you can obtain from your local bank.
How To Make a Gift of Securities Using
Gift-Planning Tools
In larger estates, securities are an ideal asset to fund a Charitable
Lead Trust. A gift bequest made through a Revocable Trust or Will
provides another alternative in making a gift of securities to
the Foundation.
Other Facts You Should Know About a
Gift of Securities
Gifts of securities provide a less expensive way for you to give
than cash. For example, if you paid $1,000 for your stock five
years ago and today's fair market value is $3,000, you will receive
an income tax deduction for the full fair market value, even though
your cost basis in the security (what you paid for the stock)
is only $1,000. The net tax benefit reduces the cost of your gift.
To avoid capital gains tax, it is important to make your gift
prior to selling the securities.
Your gift of stocks, bonds, or mutual fund shares is effective
for income tax purposes, and hence deductible, when your certificate,
accompanied by a properly prepared stock power in the name of
the receiving charity, is unconditionally delivered to the Foundation.
If the certificate is mailed to the Foundation and postmarked
prior to the end of the current year, your deduction may be taken
on the date the certificate is mailed, even though the Foundation
doesn't receive the certificate until the next year. For safety
purposes, the executed stock power should not be mailed in the
same envelope with the stock certificate.
If you deliver your stock certificate to a broker who acts as
your agent, your deduction is not effective until your agent delivers
the certificate to the Foundation or one of its staff members.
If your certificate is delivered to the issuing corporation with
instruction to transfer the security into the name of the Foundation,
the gift is not deductible until the security is actually transferred
on the books of the corporation. Since this date is unpredictable,
this method of making gifts of stocks and bonds is usually not
desirable.
If the securities you are giving are held in a brokerage account
or bank trust account (as is frequently the case when the securities
are held by a revocable trust), instructions to your broker or
trustee to transfer the securities to the Foundation will not
complete your gift for tax purposes until your broker or trustee
actually delivers the securities to the Foundation.
