Donate Stock or Mutual Funds

Donating appreciated securities, such as stock or mutual funds, to Save the Children is a tax-wise approach for providing for children in need.

An Example of How it Works

If you purchased stock for $1,500 several years ago that's now worth $5,000, and you sold it for a capital gain of $3,500, you could donate it to Save the Children, who could then, according to the Tax Code be permited (as a “Section 501(c)(3)” charitable institution) to sell the stock without having to recognize the capital gain.

If you donate the stock directly to Save the Children, you will avoid paying federal capital gains tax of $525 ($3,500 x 15% = $525). And let's assume you live in one of the states that also taxes capital gains. Assuming a 5 percent state capital gains tax rate*, you would avoid an additional $175 ($3,500 x 5 percent = $175) in taxes. This results in a total capital gains tax savings of $700.

Let's further assume you fall in the 28 percent federal income tax bracket. By itemizing your deductions, you are eligible to take a $5,000 charitable income tax deduction that saves you an additional $1,400 ($5,000 x 28 percent = $1,400) of federal income tax for the tax year you made the gift. If your state allows you to deduct charitable gifts, you can also save on your state income taxes. Assuming a 5 percent state income tax rate, this results in an additional savings of $250 ($5,000 x 5 percent = $250) for you.

In this hypothetical example, by making a stock or mutual fund donation, you are able to make a $5,000 gift that generates a total tax savings of $2,350. A direct contribution of $5,000 in cash would generate an income tax saving of $1,650. And if you were to sell the securities first and then donate what's left after paying taxes, you would only be able to donate $4,300 ($5000 less $525 + $175), which would generate income tax savings of $1,419 ($1,204 + $215). Donating long-term appreciated securities is clearly the tax-efficient way.

The table below summarizes the example: 

*More than 80 percent of the 50 States levy a tax on capital gains that can be as high as 12 percent

Advantages of Donating Stocks and Mutual Funds

Many donors choose to make gifts to Save the Children using long-term appreciated stocks and mutual funds due to the attractive tax advantages associated with such gifts.

• The benefits available to you when making a contribution of stock or mutual funds may include:
• Avoiding federal and state tax on the capital gain;
• Receiving an income tax deduction (federal and most states) for the full market value of the gift if you itemize deductions on your tax return and have held the assets one year or longer;
• Making a larger gift at a lower original cost to you.

Important facts to remember:

• You must itemize your tax return in order to deduct a charitable donation.
• You must have owned the securities for at least one year before donating them or you will be limited to a deduction of your original purchase cost of the securities.
• You may take a deduction valued up to 30 percent of your adjusted gross income. If the deduction is greater than 30 percent, you may carry any unused deduction forward for up to five years into the future until it has been fully used.
• We encourage you to consult your financial planner or tax advisor who can assist you in evaluating the tax advantages available to you when making a donation of appreciated securities.

Save the Children prefers to receive undesignated gifts, allowing for the greatest flexibility in responding to children's evolving needs and priorities, but will also accept gifts designated to a specific purpose. Please contact us if you choose to designate your gift as changes in political situations or program capabilities may affect our ability to honor you request.

Transfer your securities by DTC through your broker: To learn how to easily transfer your securities to Save the Children by DTC, please click here for instructions.

Securities held in certificate form: If your securities are held in certificate form, please contact us for specific instructions on transferring your stock to Save the Children.

Other ways to give securities: Appreciated securities may also be used to fund gift plans that provide payments for life or a number of years, such as charitable gift annuities or charitable remainder trusts.

Contact information: If you have questions about making a gift of appreciated securities to Save the Children, please call our toll-free number, 1.800.728.3843.