Do you know double benefits of donating publicly traded stocks?
The end of the year offers a perfect moment to reflect on how we are stewarding the resources God has entrusted to us, particularly when it comes to generosity. During the holiday season — a time marked by giving and gratitude — we have a unique opportunity to align our financial plans with principles of biblical stewardship and make an eternal impact through our generosity.
Charitable gifts of appreciated publicly traded stocks are particularly attractive in light of the recent growth and success of the stock markets. Through December 6th of this year, the S&P 500 is up 27.68%. This is on the back of a strong stock market in 2023 in which the S&P 500 increased 24.23%. As a result, many individuals and families who own marketable securities have realized significant growth in their holdings, which offer tremendous opportunities to have an even greater impact from their giving.
Just as in the parable of the talents, where the faithful servant multiplied what was entrusted to him (Matthew 25:14-30), we, too, are called to manage our blessings wisely for God’s purposes. Thankfully, there are many creative ways to give, particularly through non-cash charitable giving strategies that can multiply both the financial and eternal impact of our resources.
Get Our Latest News for FREE
Take, for instance, charitable contributions of publicly traded stocks. By donating appreciated, publicly traded stocks instead of cash, givers can capture double benefits — receiving the same charitable deduction as a cash gift while maximizing your charitable giving. This approach allows more of what God has provided to be used for charitable impact instead of being taxed as capital gains. Similarly, gifts of other non-cash assets — like private business holdings or real estate — can be transformed into resources for ministry, turning earthly wealth into eternal investment.
To illustrate the power and benefits of giving appreciated publicly traded stock, consider the following example: A couple owns Apple stock that has appreciated dramatically since its purchase almost two decades ago. Their initial investment of $20,000 has grown to $100,000. A gift of the stock produces a corresponding charitable income tax deduction that saves taxes at their highest marginal tax rate. Because they are in the highest federal tax bracket, this saves taxes at a rate of 37% federal, and if we assume a state income tax rate of 5%, they could save as much as 42% on each dollar gifted so they can give more to charity.
Under this example, the gift of the Apple stock could produce a charitable income tax deduction of $42,000 on the donated stock valued at $100,000. In addition, this tax-smart approach means that when the charity sells the appreciated stock more is available for charitable impact because no capital gain is assessed on the $80,000 of stock appreciation.
A donor advised fund (DAF) is a powerful tool for facilitating gifts like this. A DAF allows givers to contribute appreciated publicly traded stock and receive an immediate charitable deduction. Once the DAF sells the stock, the proceeds are available to grant to any number of churches and charities that the givers desire to support, maximized by tax-smart giving. The sale proceeds can be granted immediately, or the givers can take their time to prayerfully decide which ministries or causes to support over time.
It’s worth noting that nearly one-fourth of annual charitable donations are made in December alone, providing the funds many ministries and nonprofits rely on to carry out their missions throughout the year. By planning and maximizing your year-end giving, one not only meets immediate needs but sows seeds for a brighter future.
As we approach the close of the year, prayerfully consider how we can make the most of the resources entrusted to us. Through intentional stewardship and generosity, we can honor God, meet the needs of others, and make an eternal impact. This is the season to celebrate the greatest gift ever given — Jesus Christ — and to reflect that generosity in our own giving.
Michael King is a charitable wealth strategist and attorney at the National Christian Foundation. He works with generous families and their professional advisors, sharing concepts and strategies that allow them to leverage and maximize their giving.
