Charitable Gifts of Stock
A way to support charity and save taxes
Many people who own stock or shares in mutual funds see the value of their investments increase over the years. But now they face a problem – how to turn their investments into cash without losing a significant portion of their gains to taxes. One solution is to donate all or a portion of their investment to charity. Anabaptist Foundation can help turn your investment gains into giving opportunities.
How it works
Anabaptist Foundation can accept your gift of stock or mutual fund shares into a charitable gift fund, gift annuity, pooled income fund, or a charitable trust. Anabaptist Foundation converts your gift into cash.
If your donation is placed in a charitable gift fund, the money is available for distribution to charities you recommend at any time you wish. If your donation is placed in a charitable trust or gift annuity, payments from the trust or annuity will be paid to you or your beneficiary as long as you live. The balance of the trust or annuity will be transferred to charities you recommend upon your death or the death of your beneficiary.
Assets contributed become the property of Anabaptist Foundation, and the donor retains no legal control over the gift. Instead, the donor is entitled to give non-binding advice to the foundation about the distribution of the funds.
How to make a gift
You may make a gift of stock or mutual fund shares by mail, hand delivery, or through a broker. If your donation is to a charitable gift fund, Anabaptist Foundation makes disbursements from the fund based on your recommendations after ascertaining the charity's qualifications. Checks are generally mailed out within two business days after recommendations are received and approved. A letter is mailed with the check explaining the gift.
If your gift is made to a charitable trust or gift annuity, Anabaptist Foundation invests your donation. You and/or your beneficiary receive regular payments until you or your beneficiary's death. The balance of the trust or annuity is then distributed to the charities you recommend.
How to transfer stock or mutual fund shares
By mail or hand delivery
You should date and sign one Stock Power for each stock certificate and one Disclaimer Form for each stock issue. These forms are available from your Anabaptist Foundation representative. A Disclaimer Form may also be a letter signed by you. Your signatures must be guaranteed by a commercial bank officer or stock broker. You should place the stock certificate (not endorsed) in one envelope and the Stock Power and Disclaimer Form (with signature guarantees) in another envelope and mail them to Anabaptist Foundation, 510 Round Knob Road, Austinville, VA, 24312. The date of the gift is determined by the postmarks. You may also hand deliver the stock certificates to an Anabaptist Foundation representative. The date of the gift is the date the Anabaptist Foundation representative takes possession of the stock certificate and a properly signed Stock Power and Disclosure Form.
Through a broker
The stocks may also be delivered to a broker, but the delivery date will be when your broker transfers the stock to Anabaptist Foundation. If your stock is registered in street name (that is, the name that appears on your certificate is that of your broker), the date of delivery is when you can no longer legally revoke transfer. There can be delays in the date of transfer.
Transfer of mutual fund shares
You write a letter of instruction to the mutual fund company asking them to transfer the shares to a new account as a charitable gift for Anabaptist Foundation. An Anabaptist Foundation representative can help you draft the letter. The letter must have your guaranteed signature when it is mailed to the mutual fund company. Anabaptist Foundation may need to set up an account with the mutual fund company prior to receiving the gift. The gift date is the date the mutual fund company transfers shares to the Anabaptist Foundation account.
Advantages for donors
- Flexibility – Your gift can be placed in any of several gift plans including a charitable gift fund, gift annuity, charitable trust, or pooled income fund. You choose the plan that works best for your situation.
- Freedom – The foundation takes the responsibility to sell your securities and to manage gift proceeds.
- Avoid capital gains tax – When appreciated securities are donated, the donor does not have to pay tax on capital gains. This leaves more money to go to charity.
- Immediate tax deduction – In the year the gift is made, you get a federal income tax deduction for the fair market value of the property held long term, up to 30 percent of your adjusted gross income. Any deduction you qualify for above these limits may be carried forward for up to five successive years.
- Tax contribution receipt – Anabaptist Foundation will issue contribution receipts to donors for tax purposes.
- Privacy – If the donor wishes to give anonymously, the foundation can act as a screen between the donor and recipient charities.
A donated stock case study
Reuben and Marilyn Brubaker have owned shares of stock for 15 years. They would like to sell the shares, but the value of the stock has increased greatly since they made their initial investment. Their capital gains would be subject to income tax. The Brubakers would like to make a special contribution to a camp for handicapped youth and to a few other ministries.
Reuben and Marilyn decide to donate their stock to the Anabaptist Foundation for a charitable gift fund. The foundation then sells the shares and places the cash proceeds into the gift fund. The Brubakers get an immediate charitable income tax deduction and avoid tax on any capital gain.
After the sale of the stock, the Brubakers recommend disbursement of half of the money to the youth camp. Over the next few years, they make recommendation decisions to disburse the remainder of the funds to several different mission organizations.
