Don't forget non-cash contributions
When deciding what to contribute to your account, consider appreciated non-cash assets. You can always contribute cash, but appreciated non-cash assets held more than a year can help you achieve maximum philanthropic impact and help you reduce your taxes.
How can you have more to give to charity?
If you itemize deductions on your tax return instead of taking the standard deduction, donating non-cash assets can help you unlock additional funds for charity in two ways. First, you potentially eliminate the capital gains tax you would incur if you sold the assets yourself and donated the proceeds, which may increase the amount available for charity by up to 20%. Second, you may claim a fair market value charitable deduction for the tax year in which the gift is made and may choose to pass on that savings in the form of more giving.
Let's say you own XYZ stock with a current fair market value of $50,000. The stock has gained $45,000 in value over the years since you purchased it for $5,000. A direct contribution of the stock to a donor-advised fund or other charity (option 2), in comparison to a sale and donation of after-tax proceeds (option 1), may free up an additional $6,750 to grant to charities and potentially provide additional tax savings of $8,370.
This hypothetical example is only for illustrative purposes. The example does not take into account any state or local taxes or the Medicare net investment income surtax. The tax savings shown is the tax deduction, multiplied by the donor's income tax rate (24% in this example), minus the long-term capital gains taxes paid.
Would you like more information?
Review our infographic to better understand the benefits and process of donating non-cash assets.
Are you interested in a specific type of non-cash asset?
Select from any of the choices below to see more specific guidelines.
Publicly traded securities
Privately held business interests
Private equity fund interests
Fine art and collectibles
Equity compensation awards