Giving More for Less

Gifts of Appreciated Stock

Giving Appreciated Stock is wise stewardship

Transferring appreciated securities (stocks, bonds, mutual funds) directly to us rather than donating the proceeds after selling them is wise stewardship of the resources God has entrusted to you.

Why? If you have owned the securities for more than a year, your tax savings are significant:

• You receive an income tax deduction for the fair-market value of the appreciated stock. In other words, you get to deduct what the stock is worth today, not what you paid for it.
• You will not pay any capital gains tax upon the transfer. This frees up even more money, which means it costs you less to give more to the Lord's work!

As you can see, giving appreciated stock and other securities is wise stewardship and a great way to leverage your giving to kingdom causes.

Giving Appreciated Stock can create lifetime payments to you

You can also use a gift of appreciated stock to fund a Charitable Gift Annuity or other "Life Income" gift. You would not pay any capital gains tax upon the transfer, and you would create an income stream that is equal to or greater than the dividends your investment is currently paying you.

An example of how a gift of Appreciated Stock works

Bob and Sally purchased stock several years ago that cost them $1,500. The stock is now worth $5,000. If Bob and Sally sold the stock, it would result in a capital gain of $3,500. On the other hand, if Bob and Sally donate the stock, the IRS allows charitable organizations to sell the stock without recognizing the capital gain.

Bob and Sally decided to donate the stock directly to their favorite ministry. By doing so, they avoided paying federal capital gains tax of $525 ($3,500 x 15% = $525). We'll also assume for this example that Bob and Sally face a state capital gains tax of 5%, saving them an additional $175 ($3,500 x 5% = $175). Bob and Sally's total savings in capital gains taxes is $700.

Bob and Sally are in the 28% federal income tax bracket and are eligible for a $5,000 charitable income tax deduction. By itemizing their deductions, Bob and Sally save an additional $1,400 ($5,000 x 28% = $1,400) of federal income tax. Bob and Sally live in a state that allows them to deduct charitable gifts, saving them an additional $250 ($5,000 x 5% state income tax rate = $250).

In the end, Bob and Sally's $5,000 donation of stock saved them $2,350 in taxes. Had they given $5,000 in cash instead, they would have saved much less - $1,650. Also, if Bob and Sally had sold the stock first and then donated the proceeds, their gift would decrease to $4,300 ($5,000 minus the capital gains tax savings of $700), bringing their total tax savings down to $1,419.

How does the transaction work?

It's quite simple. We will either handle the stock transfer ourselves or put you in touch with Barnabas Foundation to arrange the stock transfer. When the shares are liquidated, you will receive a receipt. The receipt identifies the name of the stock, number of shares given, the date of the donation, etc. In essence, it provides all the relevant information needed to substantiate your charitable contribution for income tax purposes.

Sounds great! What do I do next?

Contact us today to get started. You'll then be on your way to giving more for less!

Calvin Theological Seminary is a member of Barnabas Foundation. Their goal is to help caring Christians make tax-wise decisions and strengthen support for ministries close to their hearts.

This is general information and is not intended to be tax or legal advice. Please consult your own advisors.