Transferring stock directly as a donation compared to selling your shares and donating the after-tax proceeds may allow you to avoid capital gains taxes on the appreciation and claim a charitable deduction for the full market value.
The Benefits of Donating Stock Directly
Joe and Shannon are married and in the highest federal income tax bracket (37%). They purchased stock more than a year ago for $5,000, and today, the stock has appreciated by $20,000 and is now valued at $25,000. They’re committed to giving back and want to support children’s health with a gift of stock.
Initially, they might consider selling the stock and donating the $25,000 from the sale to Children’s Hospital Colorado Foundation. If they choose this route, they may face a capital gains tax of $4,000 (20% of the $20,000 appreciation).
Instead of selling the stock first, Joe and Shannon decide to donate the stock directly to Children’s Hospital Colorado Foundation. By doing so, they may avoid capital gains tax entirely and receive a charitable deduction for the full fair market value of the stock — $25,000.
This strategy maximizes their donation. By donating the stock directly, Joe and Shannon are giving about 20% more than if they sold the stock and then made a cash donation. The increase is due to the savings from avoiding capital gains taxes.
Comparison: Donating Stock vs. Selling and Donating Proceeds
|
Illustration 1
Donate Stock Directly |
Illustration 2
Sell Stock and Donate Proceeds |
|
|---|---|---|
| Fair Market Value (FMV) of Stock | $25,000 | $25,000 |
| Charitable Gift Value | $25,000 | $25,000 |
| Tax on Capital Gains | $0 | $4,000 |
| Tax Savings from Charitable Deduction | $9,250 | $9,250 |
| Net Tax Savings | $9,250 | $5,250 |
Consult with your tax advisor to see how giving appreciated assets could be part of your financial plans and make an even greater philanthropic impact today.
Assumptions: The example assumes an original cost basis for the stock of $5,000, that it has been held for more than one year, and a federal long-term capital gains tax rate of 20%. These illustrations do not consider any state or local taxes or the Net Investment Income Tax. The tax savings shown is the tax deduction multiplied by the donor’s assumed income tax rate of 37%, minus the long-term capital gains taxes paid. For 2025, taxpayers are in the 37% bracket when their taxable income exceeds $626,350 for individuals and $751,600 for married couples filing jointly.
Donating Appreciated Stock is Easy
Simply transfer your shares to Children’s Hospital Colorado Foundation’s account at Charles Schwab through your broker or by using your self-directed investment platform.
DTC #: 0164 Code 40
Account #: 2308-2848
Account Name: Children’s Hospital Colorado Foundation
Federal Tax ID: 84-0813462
Schwab Denver: 720-895-3412 or 1-800-435-4000
For a seamless transfer, please authorize your broker to release your name as the donor of the stock and provide as much of the following in writing:
| 1. Your name and address |
| 2. Gift designation |
| 3. Your broker’s contact details (name and phone number) |
| 4. Name and ticker symbol of stock to be donated |
| 5. Number of shares to be donated |
| 6. Expected transfer date |
Information provided is general and educational in nature and should not be construed as legal, accounting or tax advice. Every taxpayer’s situation is different. Rules and regulations regarding tax deductions for charitable giving vary, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy or completeness of the information provided. Please consult an attorney or tax advisor regarding your specific legal or tax situation prior to taking any action based on this information.