Updated: Jun 14
Supporting causes in your local community that you care about can make you feel good and make a difference in the lives of others. In the past, I have volunteered, provided annual gifts of cash, and held fundraisers for organizations like the Champaign Public Library Foundation, Feeding Our Kids, the Eastern Illinois Foodbank, and the Krannert Center for the Performing Arts at the University of Illinois. My partner and I believe these organizations enhance the lives of people in the Champaign-Urbana community. We value the work they do and want to contribute.
Many of Peak Wealth Planning’s clients have enjoyed financial success and in turn support organizations important to their vision and values for their community. Our clients volunteer their time and provide donations. Some of our clients donate cash, while others hold appreciated stock and make annual gifts of stock directly to organizations.
If you would like to make a donation to a cause you care about, consider donating appreciated stock to charity rather than selling the shares outright and donating the cash.
Donating Appreciated Stock
By donating stock you can support a charity’s mission. Donating appreciated stock to a tax-qualified charity may allow you to lower your taxes. If you have held the stock for more than a year, you may be able to deduct the fair market value of the stock on your taxes in the year that you donate. This will reduce your tax bill. If the charity is tax-exempt, it may not face capital gains tax on the stock when it sells shares to meet its operating or capital needs.
If you sell shares of appreciated stock from a taxable account and subsequently donate the proceeds from the sale to charity, you may face capital gains tax on any gain you realize, which effectively reduces the benefit of a cash donation. With a stock gift, a tax-exempt charity may receive full value when the shares are sold.
Remember the tax rules for charitable donations. If you donate appreciated stock to a charity, you may want to review IRS Publication 526, Charitable Contributions. Double-check to see that the charity has non-profit status under federal tax law, and be sure to ask your accountant to record the deduction on a Schedule A that you attach to your 1040.
When is donating cash a choice to consider? If you don’t have appreciated stock, donating cash supports the organization you care about and may allow you to take a deduction on your federal taxes. As an example, if a donor in the top 37% federal tax bracket gives a 501(c)(3) non-profit organization a gift of $5,000, her actual cost may be $3,150 after $1,850 realized in tax savings. A donor may also receive state tax savings.
Make a Plan Today
Gifting cash or other assets to an organization is a wonderful opportunity. You may want to ask your trusted financial advisor how giving fits into your financial plan. Keep in mind that tax rules are constantly being adjusted, and there’s a possibility that the current rules may change. There are annual limits to tax deductions you can take for donations to charity. Make certain to consult your tax professional before embarking on a gifting strategy.
Make a Difference in the Community:
Champaign Public Library Foundation: The Champaign Public Library Foundation is committed to raising private funds to nourish the love of learning, make information available to all, and bring the community together.
Eastern Illinois Foodbank: The Eastern Illinois Foodbank exists to alleviate hunger in eastern Illinois by providing a reliable source of food for the hungry through cooperation with a network of food pantries and agencies.
Feeding Our Kids: Feeding Our Kids provides nourishing food to food-insecure school children in Champaign County on weekends and school holidays throughout the school year.
Krannert Center for the Performing Arts: Krannert Center for the Performing Arts is dedicated to the advancement of education, research, and public engagement through the pursuit of excellence and innovation in the performing arts.
If you are a Peak Wealth Insider that would like to contribute to this list, please reach out to us with the name of the organization, link to their site, and how they make a difference in the community.
Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.