When you’re deciding how and what to contribute, be sure to consider all the options. Yes, you can always give cash, but making non-cash contributions may reduce your taxes, increase your charitable contributions, and be a smarter way to give.
Donate appreciated assets to your Schwab Charitable™ account so that you can give more to your favorite charities while also paying less in taxes.
Let’s say you own stock with a current value of $55,000, which you purchased for $5,000. Over the years, the stock has accrued $50,000 in long-term capital gains.1
With a direct donation to a Schwab Charitable donor-advised fund account, your income taxes are reduced by an additional $10,000 and the charity receives $5,000 more:
|Sell stock and donate net proceeds (cash) to charity||Donate stock to Schwab Charitable donor-advised fund account|
|Current fair market value of securities||1,000 shares
@ $55 per share = $55,000
@ $55 per share = $55,000
|Federal long-term capital gains tax (20%)2
Assumes a cost basis of $5,000 and long-term capital gains tax of $50,000
|$10,000 paid||$10,000 avoided|
|Charitable contribution/charitable deduction2||$45,000||$55,000|
|Value of charitable deduction
Assumes donor is in the 39.6% federal income tax bracket
|Total donor tax savings less capital gains tax paid||$7,820||$21,780|
1. Assumes cost basis of $5,000, that the investment has been held for more than a year, and that all realized gains are subject to a 20% federal long-term capital gains tax rate. Does not take into account any state or local taxes, or potential Medicare surtax resulting from net investment income.
2. Availability of certain federal income tax deductions may depend on whether you itemize deductions. Charitable contributions of capital gains property held for more than one year are usually deductible at fair market values. Deductions for capital gains property held for one year or less are usually limited to cost basis.
The example is hypothetical and provided for illustrative purposes only. It is not intended to represent a specific investment product.
If you’re about to change jobs, face a large tax bill, sell an appreciated investment, receive an inheritance, or retire, it might make sense for you to donate your non-cash assets to a charity via a Schwab Charitable account.
Watch an overview of non-cash assets for continuing education credit.
Donating appreciated assets instead of cash can be a tax-smart way to give to charity. Read our white paper titled Why It Might Make Sense to Donate Your Best Investments Instead of Cash or access these resources to learn more:
We’ve helped donors contribute other assets, including the cash value of life insurance policies, artwork, collectibles, and even livestock. IRS rules for donating some assets can be complex, so let us help you review your specific circumstances.