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Smart Year-End Charitable Giving

We are a nation of procrastinators, at least with respect to charitable giving.  Indeed, a very large percentage of charitable giving occurs According to the National Philanthropic Trust, 30% of all charitable gifts in the United States are given in December.  Further, more than 10% of giving is done in the last two days of each calendar year.  So it is very likely that you may have some last minute charitable giving to do between now and year-end.

We encourage you to maximize your charitable giving through prudent tax planning.  One of the first and most impactful way to give is to donate appreciated securities to the charity of your choice.  If you maintain a taxable investment account with positions that have large embedded capital gains, this strategy is likely for you.

The gifting of appreciated securities is best highlighted with an example.  Suppose you own $1,000 worth of ABC mutual fund that has experienced 100% growth over the past 10 years.  If you sold this mutual fund today, you would owe tax on the $500 of long-term capital gains that you realized from this investment.  But if you donated the mutual fund in-kind to your favorite charity, you would be able to gift the full $1,000 value of the fund without paying any capital gains tax.  What’s more, you would receive the full $1,000 value of the charitable giving write off.  It’s a win-win situation that allows you to give more, while paying less in taxes.

There is some nuance to the gifting of appreciated securities, including limits relative to your income.  As always, please consult your CPA to clarify any tax questions you may have.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

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