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FOUNDATION NEWS Caring for the Ministry of Grace: "Ecclesia Perpetua" November 2006 | ||||
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If you have a choice, it is usually better to give appreciated stock to ministry rather than to give cash. Here's why: You receive an income tax charitable deduction for the appreciated value, not just what you paid for the stock in the first place. You also avoid tax on the growth.
Consider Mrs. Donor. She wants to give Camp Lutherwood $5,000. If she wrote a check for this amount, it would cost her $5,000. Let's assume, however, that Mrs. Donor has stock worth $100 per share that she bought years ago for only $10 a share. Excellent growth, but not unusual for a good growth stock. If Mrs. Donor gave 50 shares of this stock to Camp Lutherwood, the gift value would be $5,000, not the $500 she paid for these shares originally. In other words, her $5,000 gift would cost her only $500! Also, consider the capital gains tax Mrs. Donor would have to pay if she sold those 50 shares outright. Ouch. She avoids all of the taxes by simply transferring those shares to the ministry. Since the ELCA is a qualified charity, the IRS permits us to sell those appreciated shares without paying tax. We are able to avoid the "growth tax," and so does Mrs. Donor. Now do you see why we encourage our donors to "give the growth"? There are, of course, a few rules. First, you |
must have owned the stock for at least a year and a day prior to making the gift. Second, the value of the gift is determined by the average trading price on the day the gift is made.
Third, the charitable income tax deduction can be applied, on an itemized return, up to 30 percent of the donor's adjusted gross income, whereas a cash gift is deductible up to 50 percent. Fourth, if you are unable to apply all of the deduction in one year, you have an additional five years to use it. Your accountant can explain these things and anything else that may apply to your situation. It is prudent to obtain professional advice when making a non-cash gift. You may agree that "giving the growth" is a good idea, but the process may seem difficult. After all, "I haven't done anything like that before." Well, this is one reason we have a planned-giving office at the Oregon Synod of the ELCA. Our director, Patricia Larsen, is an experienced gift planner and she can explain how the process works, and assist you along the way. Actually, giving stock is a common practice for many donors. It's much easier than most people think. For more information, request our free brochure on giving stock. Call Tricia at (503-244-4102). If you wish, she will be happy to discuss these matters with you personally. | ||||
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