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 (35%). 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 their stock shares.
Initially, they considered selling the stock and donating $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 on the sale (20% of the $20,000 appreciation).
Instead of selling the stock first, Joe and Shannon decided to donate the stock directly to Children’s Hospital Colorado Foundation. By doing so, they may avoid capital gains tax entirely and claim a charitable deduction for the full fair market value of the stock, subject to IRS limits.
Giving stock shares directly maximizes their donation, enabling Joe and Shannon to give about 20% more than if they had sold the stock and then made a cash donation. The increase is due to the savings from avoiding capital gains taxes.
Illustrative Comparison: Donating Stock vs. Selling Shares 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 | $8,750 | $8,750 |
| Net Tax Savings | $8,750 | $4,750 |
Please note: Tax savings shown assume the donor is subject to the maximum 35% limit on itemized deductions. Actual benefits vary based on income level and tax bracket. Consult with your financial advisor or tax advisor to see how giving appreciated assets to charity could be part of your financial plans and make an even greater philanthropic impact today.
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: This illustrative example assumes the stock has been held for more than one year, qualifies for long-term capital gains treatment and that the donor itemizes deductions. It does not consider state or local taxes, the Net Investment Income Tax, alternative minimum tax or other individual limitations.
2026 Tax Law Update: Beginning in 2026, federal law limits itemized charitable deductions for some taxpayers. Only charitable contributions above 0.5% of Adjusted Gross Income (AGI) are deductible and the tax benefit of itemized deductions may be capped at 35% per dollar for certain high-income taxpayers. This illustration assumes the 0.5% AGI threshold was exceeded by other charitable gifts and the 35% cap was not reached.
This example is provided for general educational purposes only. New federal tax rules in 2026 may affect the timing and value of charitable deductions based on your income and overall giving. Consult a qualified tax or financial advisor to help you evaluate how these rules apply to your personal situation.
Put Your Gift of Appreciated Stock to Work Today
Your gift of stock to Children’s Colorado goes to work right away serving children and families in our community. 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
To ensure a seamless transfer, please authorize your broker to disclose your name as the donor of the stock and provide as much of the following information in writing:
| 1. Your name and address |
| 2. Gift designation |
| 3. Your broker’s 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.