I donate stock that has appreciated the most in my portfolio. I’ll do this by selecting the asset (eg the share of the fund), identifying the tax lots, then sorting by cost basis. If you’re gonna avoid gains, avoid the largest ones!
Would be very nice if there was a “donate” button next to the “sell” button for each tax lot. Unfortunately no one makes this part easy.
This also seems to be true for Germany. From the respective German Doctors Without Borders page:
Beim Verkauf von Wertpapieren fällt in der Regel Kapitalertragsteuer (25% zzgl. Solidaritätszuschlag) an. Als steuerbegünstigt anerkannte gemeinnützige Organisation sind wir von der Körperschaftsteuer und dem Solidaritätszuschlag befreit. Den von uns erzielten Veräußerungserlös Ihrer Wertpapiere können wir ohne Abzug von Körperschaftsteuer und Solidaritätszuschlag in unseren Projekten einsetzen. Somit sparen Sie sich nicht nur den Aufwand eines Verkaufs, es fließt auch mehr Geld in unsere Hilfsprojekte.
@Sebastian Schwiecker Does Effektiv Spenden support donating stocks? Haven't seen it on the website.
Yeah, we do. Unfortunately legal situation is quite confusing in Germany. Different financial authorities (Finanzämter) treat it differently (should the donation receipt should show the Anschaffungswert or the Veräußerungswert). IN any case, if you or someone else wants to donate stock, please get in contact with us.
Found the LinkedIn Post with some more details: https://www.linkedin.com/posts/felixoldenburg_aufruf-zur-aktienspende-und-zur-klärung-beim-activity-7404418355169943554-29AU/.
The actual logistics of donating stock are a pain.
If they set up an every.org page it looks straightforward? e.g. select stock on this
If you try the steps that follow it's actually pretty annoying, unfortunately.
My understanding is that I can simply need to print and send the letter/email from Every.org to Interactive Brokers, and they will facilitate the transfer.
One thing to note here is that end-of-year transfers can only be facilitated if the request has been made by the start of December. Another is that because I submitted my request too late in December, I will have to submit it again in January.
However, all things considered, if they do facilitate the transaction based on the submission of the email/letter shared from Every.org it will feel like a relatively straightforward process for me. However, maybe I'm going to find out later that there are some other complications in the process that I've missed?
Thanks for sharing, I agree this is likely a very underutilized donation method relative to the potential increased impact (and realistically probably encourages people to give more than they would in cash).
Has anyone used this service? https://donatestock.com/ (looks like they email your brokerage, and then cash out the stock through their non-profit and distribute to the end nonprofit (unless that nonprofit indicates to donatestock they want the actual asset).
I think a DAF is probably just the best logistical answer, I know Daffy has been gaining traction and seems to also push people in this direction (though I haven't tried it out myself).
Notably the DAF option excludes you from many giving opportunities, including (in the US) 501c4 advocacy organizations and political campaigns.
I've also seen https://donatestock.com/ and was curious about the user experience, but when i loosely explored it, I didn't see it as particularly helpful for donors. First, not all the charities I wanted to donate to were readily listed (e.g. The Life You Can Save). Second, it didn't seem much easier than just filling out the e-form on my banks' website. DonateStock seems to only facilitate one-time stock donations, rather than offering a monthly recurring option (as I'd like to see) which I see as the real problem solver here.
Would be curious to hear from others on this
While you avoid capital gains tax when donating appreciated stock to a 501(c)(4), you will want to confirm with the organization that it will be able to avoid taxation on the capital gain as well. The 501(c)(4) takes the donor's basis in the donated stock under the general rule for gifts at I.R.C. 1015(a).
A 501(c)(4) is subject to tax under I.R.C. 527(f) on the lesser of its net investment income or
certain political activity. My understanding is that tax usually hits at 35%, and so paying it is worse than the donor paying at 15-23.8% and then donating the balance. On the other hand, I believe that organizations can get around this if they can avoid having net investment income and certain political expenditures in the same year. The org should know if it is going to have the specified type of expenditures in a year it may sell the donated, appreciated stock.
It depends a lot on what the org is doing, but my understanding is that even most advocacy 501(c)4 organizations stick to lobbying and not campaigning (which would trigger 527(f) taxes). But you're right, worth checking!
This is not just helpful for the donors among us, but also for the fundraisers and effective giving initiatives who occasionally get questions from donors about stock gifts--we can now better inform them. So, thanks for this post and thanks too for the additional clarifying comments.
When you sell stock [1] you pay capital gains tax, but there's no tax if you donate the stock directly. Under a bunch of assumptions, someone donating $10k could likely increase their donations by ~$1k by donating stock. This applies to all 501(c) organizations, such as regular 501(c)3 non-profits, but also 501(c)4s such as advocacy groups.
In the US, when something becomes more valuable and you sell it you need to pay tax proportional to the gains. [2] This gets complicated based on how much other income you have (which determines your tax bracket for marginal income), how long you've held it (which determines whether this is long-term vs short-term capital gains), and where you live (many states and some municipalities add additional tax). Some example cases:
A single person in Boston with other income of $100k who had $10k in long-term capital gains would pay $2,000 (20%). This is 15% in federal tax and 5% in MA tax.
A couple in SF with other income of $200k who had $10k in long-term capital gains would pay $2,810 (28%). This is 15% in federal tax, 3.8% for the NIIT surcharge, and 9.3% in CA taxes.
A single person in NYC with other income of $600k who had $10k in short-term capital gains would pay $4,953 (50%). This is 35% in federal tax, 3.8% for the NIIT surcharge, 6.9% in NY taxes, and 3.9% in NYC taxes.
When you donate stock to a 501(c), however, you don't pay this tax. This lets you potentially donate a lot more!
Some things to pay attention to:
Donations to political campaigns are treated as if you sold the stock and donated the money.
If you've held the stock over a year and are donating to a 501(c)3 (or a few other less common ones like a 501(c)13 or a 501(c)19) then you can take a tax deduction of the full fair market value of the stock. This is bizarre to me (why can you deduct as if you had sold it and donated the money, when if you had gone that route you'd have needed to pay tax on the gains) but since it exists it's great to take advantage of.
This only applies if it's a real donation. If you're getting a benefit (ex: "donating" to a 501(c)3 but getting a ticket to an event) that's not a real gift and doesn't fully count.
If you're giving to a person, you don't pay capital gains, but they get your cost basis (with some caveats). When they sell they'll pay capital gains tax, which might be more or less than you would have paid depending on your relative financial situations. If they're likely to want to make a gift to charity, though, it's much more efficient to give them the stock.
The actual logistics of donating stock are a pain. If you're giving to a 501(c)3 it's generally going to be logistically easier to transfer the stock to a donor-advised fund (I use Vanguard Charitable because it integrates well with Vanguard), which can then make grants to the charity. This also has a bonus of letting you pick the charity later if you want to squeeze this in for 2025 but haven't made up your mind yet.
[1] I say "stock" throughout, but this applies to almost any kind of
asset.
[2] Note that "gains" here aren't just the real gains from your stock becoming more valuable, but also include inflation. For example, if you bought $10k in stock five years ago ($12.5k in 2025 dollars) and sold it today for $12.5k in 2025 dollars, you'd have "gains" of $2,500 even though all that's actually happened is that the 2025 dollars you received are less valuable than 2020 dollars you spent.
I believe this applies only to stock that has appreciated in value, right? If you have losers, you want to take the capital loss (either to offset your capital gains, or to reduce your other income by up to $3,000 with carryover available).
There's an argument for some people to buy stock to donate. Those of us who bunch their donations to maximize deductibility should probably be buying a variety of somewhat volatile stocks during our off years, donating the winners either directly or through a DAF during our giving years, and selling the losers to harvest the losses whenever appropriate. (Just remember to avoid creating a wash sale!)