Donating appreciated stock is up to 37% more tax-efficient than cash. Why?
It’s pretty simple actually.When you sell stock for a gain, you owe capital gains taxes to the government reducing your gain and the amount you are able to give. By donating stock, you are essentially redirecting the tax you would pay to the government to the church resulting in a bigger impact and a larger tax deduction for you!Give through our partner Overflow by clicking above or check out the example below.
IF YOU SELL STOCK AND DONATE CASH
Conversely you could sell your 4 shares and receive $100 but you would then owe $21 in capital gains tax leaving you with $79 in proceeds that you could donate.
IF YOU DONATE STOCK DIRECTLY
Let’s assume your tax rate on capital gains is 35%, and you want to donate $100 to church. If you acquired Nike stock at $10, and it’s now trading at $25, you could donate 4 shares to reach your $100 goal.
Who is Overflow? Overflow is a digital solution for donating non-cash assets, enabling donors to give in a tax-efficient way. Donors can experience the ease of giving via stock or crypto in less than five minutes from their mobile device. Overflow also provides givers access to a private Donor Portal which enables visibility into transaction history, transaction statuses, and the ability to update connected financial accounts.
Is giving through Overflow safe and secure? Overflow's Information Security Program is SOC 2 compliant, a widely respected information security auditing procedure. Overflow does not have access to nor stores any brokerage account usernames or passwords. They use Yodlee, a third-party provider, that handles the brokerage login process. Over 600 companies including PayPal, Mint, and Amazon use Yodlee to connect their clients’ accounts.
What specific stock could I donate? You can give any publicly traded stock through Overflow. By donating assets that have appreciated in value for more than one year, you are more likely to maximize the potential tax benefits.
Can I give through my 401K or IRA? Overflow can process all whole shares of publicly traded stock, including 401Ks and IRAs. However, because donors often incur penalties for withdrawing these assets before a certain date, we highly recommend consulting your tax professional before donating these types of assets. Donating 401Ks or IRA could result in major tax penalties or even fewer tax benefits than donating cash.
Can I give company stock outside of the trading window? If you received company-distributed stock as an employee and the trading window is not open, your brokerage will likely reject the transfer request. We highly advise you ask your company for the trading windows and give during those time periods, which typically are open quarterly for 3 to 4 weeks at a time.
Does Overflow support gifts from my brokerage account? Overflow currently supports over 10 brokerages via their self-guided platform including the most popular brokers such as Charles Schwab, Fidelity, and E*Trade. If Overflow doesn't have a direct connection to your brokerage account, your gift can still be fulfilled through their off-platform concierge service. If you are in Overflow's donor experience and your brokerage account is not one of the 10+ currently supported with a direct connection, you'll be taken to a form to contact Overflow's transaction operations team. You can also choose to opt into Overflow's fully-guided concierge service by emailing email@example.com.