Most of the NGOs, hospital, schools, charities accept stock as a donation or gift. Donating Stock, instead of cash can be highly beneficial for both the parties. As donating stock not only helps non-profit causes but also benefits investors with many significant cash benefits from reduced taxation and avoiding taxation on long term capital gains.
If you are thinking of donating stock then it can be designated as both good as well as a bad idea. The time in which donating stock is considered as a good move is the time when the stocks have risen in their values since the time you purchased them. In the case when the stocks have gone down in their values then experts recommend that it is better to sell them off and then donate the money of sales to some charity.
Now, for an example if there is a person who has held certain stocks for a time period say more than a year or so (an year is the minimum time in which the tax benefits can be derived). Now such person can donate stock or stocks to some charity in a direct mannerism. And while donating stocks the fair market value of the stocks can be deducted right on the day they were donated by you. This is the real return than you gain in the case when you liquidate your stocks or preferably sell them off. This also enables you to not pay the 15% or increased capital gains tax which has to be given under the circumstance when you sell the stocks.
This serves as a dual benefit to the stock owner who decides to
Donate Stock in charity as it brings in 15% more of tax deduction which means there is no paying of capital gains tax. Just because of this reason some advisers mark donating stocks as a double win situation. Also, it is a better choice when compared to selling the stocks first and then donating the sale proceeds to charity. Consider again that you have possessed the stocks for more than one year and in that period the stocks actually increase in their value.
In the opposite scenario, the stocks which you purchased about a year ago and since that time they lose their value an advisable option is to sell them first and thereafter donate the sale proceeds to some good charity. This condition helps you as you can deduct few of the losses which were incurred on the stocks onto the income tax return you file in. Again, this turns out to be a winning situation.
There are many different charities that are now readily accepting the
Stock Donations given by the stock owners. In certain cases the mutual funds also come in the category of stocks. So just put forward your kind hand and start searching for your favorite charities that will accept stock donations.
