How to Gift Company Stock to Charity
Toward the end of the year, I get a lot of questions about gifting shares of publicly-traded company stock to charity. Company stock that you’ve acquired from Restricted Stock/RSUs, stock options and ESPPs can be gifted just like any other stock you own. In my most recent YouTube video post, I discussed the benefits of gifting company stock to charity. These include supporting your favorite charity, receiving a tax deduction if you itemize, and avoiding long-term capital gains tax on highly appreciated shares. For more detail on the subject, be sure to check out my video.
For those of you who’ve decided this strategy makes sense, today’s blog is all about logistics. Together, we’ll walk through the process of gifting shares from your brokerage account to your favorite charity.
Step 1- Make sure your company allows for gifts of stock
Once you are vested in your company stock you have shareholder rights. This means you have the ability to sell, transfer, and gift shares. However, it’s best to review your company stock plan documents to make sure your company allows you to gift shares of your company stock to charity. If you’re unsure of where to locate this information, reach out to your stock plan administrator and they can point you in the right direction.
Step 2- Contact the charity
Contact your charity to determine if they accept gifts of stock. Many charities will list this information on their website. You will most likely have to place a call to the charity for all of the required information. You’ll find most charities have a dedicated individual that knows all about gifting.
In order to facilitate a transfer of shares to a charity, you’ll need the name of their brokerage firm, their DTC (Depository Trust Company) number, account number and title. Once you’ve obtained this information, it's time to reach out to your brokerage firm.
Step 3-Contact your brokerage firm
Contact your brokerage firm to find out their process for transferring stock. They will explain if they require a certain form or if they will accept a written letter of authorization from you.
Be aware of year-end deadlines! It’s best to have all signed requests into your brokerage firm no later than December 15th. Many companies impose a year-end deadline after which they can’t guarantee the transfer will happen in the same calendar year. If you’re gifting for tax purposes, this detail is particularly important to you.
Step 4 -Fill out the paperwork and submit
Because gifting stock is common, many brokerage firms provide a form for you to complete. These forms are particularly helpful as they will make sure you complete all the required information. Here’s what you can expect to complete:
Your account number and title
The number of shares you’d like to gift. You can also specifically identify a particular tax-lot.
The receiving firm’s information (DTC number, charity’s account title, and number)
Your signature as the account holder
Step 5- Notify your charity
When charities receive stock into their brokerage account they don’t know who it came from. As you can imagine, towards year-end charity brokerage accounts receive lots of gifts of all types of stock. If you let them know the number of shares and the date of your transfer, they can send you a gift letter for your records.
For tax purposes, the deduction will amount to the fair market value of the stock on the date you gifted the shares. The fair market value is found by taking the average of the high and low of the stock for the day. For publicly traded stocks, this information can be easily obtained. Please note if you are donating privately held stock there are additional IRS requirements. Remember, in order to qualify as a donation, the charity must be a qualified charity. Consult your CPA or tax professional for guidance regarding the tax details. You can also reference IRS Publications 526 and 561.
Finally, make sure to leverage your brokerage firm’s support as well as your contact at the charity. They can help with any questions or concerns that arise.
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Christine Centeno, CFPⓇ, MS is the founder of Simplicity Wealth Management. She has over 12 years of industry experience as a financial advisor and is a member of several professional organizations including NAPFA, FPA, and the XY Planning Network. She also holds her Masters in Financial Planning. In 2019, after years of working for large firms, she founded her own firm. Simplicity Wealth Management provides clarity to the complicated nature of financial planning and investing by delivering comprehensive advice without hidden fees and unnecessary jargon that leaves you in the dark. The goal is to deliver transparent, easy-to-understand guidance to help clients achieve their financial goals and remain informed every step of the way.
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