At The Foundation for Enhancing Communities (TFEC), most of our donors have been made aware, often repeatedly, that giving highly appreciated stock to their favorite charities is a very tax-effective strategy. Indeed, gifts of shares held for more than one year are typically deductible by the donor at fair market value. When the charity sells the shares, the charity receives 100 cents on the dollar because nonprofit organizations don’t pay income tax. The net-net here is that the donor:
- Benefits from a favorable income tax deduction.
- Avoids the capital gains tax that would have been triggered if the donor had sold the shares and used the cash proceeds to make the gift to charity.
- Maximizes value for the charity.
So, with all these benefits, why do so many donors forget about giving stock when they’re ready to make a gift to your organization or your organization’s endowment fund at TFEC? Sometimes a donor is in a hurry, doesn’t think it through, and writes a check before realizing that it would have been better to give stock. Sometimes a donor assumes it will be too much of a hassle to pursue a stock gift.
This is why it is so important that TFEC mentions the benefits of giving stock in nearly every fundraising communication. At any point in time, during any year and any month, regardless of whether the stock market as a whole is up or down, at least a few of our donors will be sitting on highly-appreciated stock. Those are the donors who need to hear the message. Already in 2024, for example, several stocks are hitting milestone one-year performance marks. We assure our donors that giving stock to our endowment funds is very easy. Seamless processing for stock gifts is one of the many benefits of establishing your organization’s endowment fund with TFEC.
As always, please reach out to TFEC for ideas and strategies to build your endowment fund through donors’ gifts of stock. We would love to help you seize the opportunity!
