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Methods of Gifting Stock
(Part of a series of articles on charitable giving and the
Union County Foundation by David Vollrath - Exec. Dir.)
In the words of Martha Stewart the gifting of stock to charity is a good thing. It’s a good thing because the donor
receives a federal charitable tax deduction for the full value of the stock at the time of the gift while at the
same time by-passing capital gains tax on the stock’s appreciation. It’s kind of like having your cake and eating
it too. If you bought the stock for $2000 and donated it when it was worth $6000 you have avoided a tax liability
on $4000 worth of gain. Having established the logic behind a charitable gift of stock one might wonder how best
to actually execute the stock gift.
There are four basic ways to "gift" stock to charity.
- The first is by direct transfer from the financial services firm. Your
stockbroker may hold your shares in a "street" account that maintains an electronic record of each individual
shareholder. In transferring shares to your favorite charity you would simply contact your broker, who would then
arrange for a direct electronic transfer of your shares to the account of the receiving charity. In this type of
transaction it is important to obtain and keep the written confirmation of the transaction to establish in what
calendar year the transaction occurred.
- The second method of stock transfer is by "stock power." If
a donor holds the actual stock certificates then it is possible to mail them directly to the charity. In this case
the donor signs (and has witnessed) a stock power. A broker can assist you with the stock power. Once completed
the stock power generally is mailed by registered mail in one envelope to the charity while the actual certificates
are mailed separately. This separation helps assure the safety of the stock gift since all the documents are needed
for the charity to complete the transaction.
- The third method is by endorsement of certificate. This method involves
simply endorsing and filling out the transfer form on the back of the stock certificate. Generally in this case
you would physically deliver the endorsed stock certificate to the receiving charity.
- The fourth method is through certificate sent to corporation. This involves
sending the certificate to the corporation (or their corporate agent) and asking the corporation to issue a new
certificate to the charity. The corporation generally will require the donor to fill out and sign appropriate forms
to execute the transfer. Be advised that this method generally takes 4-6 weeks and therefore if initiated at year-end
could possibly push the donor’s tax deduction into the following tax year.
We recommended a donor should always work closely with their professional
advisor(s) when transacting or contemplating a gift of stock.
The Union County Foundation encourages you to consider your present and
future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving
and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable
choices. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by
our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in
time.”
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