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The Free Methodist Foundation
8050 Spring Arbor Road
PO Box 580
Spring Arbor, Michigan 49283
phone: 517.750.2727
toll free: 800.325.8975
fax: 517.750.2752
email: info@fmfoundation.org
Giving Securities
How to give more by giving securities
Many people find that the best way to make charitable gifts is in the form of marketable securities that have increased in value. It may be possible to make your usual gift at lower cost or even make a larger gift at no increased after- tax cost.
Double Tax Benefits
One reason why it can be economical to make a gift of securities stems from what might be considered a "double tax benefit."
When you give securities (stocks, bonds or shares in a mutual fund) that have increased in value and have been owned long enough to qualify as long-term property, you are entitled to a federal income tax deduction based on the current fair market value of the security, regardless of original cost.
The second benefit comes from the fact that a gift is not a sale. As a result, you do not have to pay capital gains taxes on any increase in value in the securities given. The tax would be due if you sold them yourself.
Bypassing the tax altogether by making a charitable gift can be a major benefit. For example, if the securities mentioned above were purchased for $300 and sold for $1,000, tax on the $700 increase in value could be bypassed.
Give more at the same cost
To arrive at the total tax savings for a gift of appreciated securities, you must count both the charitable deduction and the capital gains tax bypassed. Thus, the net cost of giving can be significantly lower when a gift is made in the form of appreciated property rather than cash.
How is this done?
Making a gift of publicly traded securities is easy. There are several ways to go about it, but the basic procedure involves completing a form your stockbroker can supply and then notifying the charitable recipient of your plans. The Free Methodist Foundation would be happy to assist you as you give to Free Methodist ministries.
The timing of your gift of securities may simply be determined by your desire to give and the needs of the charitable recipient. Or you may decide to give when the tax considerations indicate the gift will be especially advantageous. Many gifts of securities are made in late summer or fall as donors evaluate their tax and financial situations before year's end.
The value of your investments may also play a part in determining when you should give. Ideally, for maximum tax benefits, you should give highly appreciated securities you would otherwise plan to sell.