Donating stock you have owned for more than a year gives the charity more money and costs you less than selling the shares and writing a check. Transfer them directly and no capital gains tax is triggered on the growth, the charity sells them tax free because it is exempt, and your deduction is based on what the shares were worth on the day they moved.
Why the Shares Beat the Cash
Suppose you bought $4,000 of a stock several years ago and it is now worth $10,000, and you want a charity to have it.
Sell first and you realize $6,000 of long-term gain. Federal capital gains tax comes off that growth, higher earners can owe the net investment income surtax on it as well, and the charity gets whatever is left. Transfer the shares instead and there is no sale by you, so there is no gain to tax. The charity is exempt, so when it sells there is no tax at that end either. The whole $10,000 goes to work.
| Sell the shares, then give the cash | Transfer the shares | |
|---|---|---|
| Tax on the growth | You owe capital gains tax on the gain | No sale by you, so no gain to tax |
| What the charity receives | What is left after the tax | The full market value |
| What you can deduct | The cash you handed over | The market value of the shares |
| Who pays tax when the shares are sold | You do | Nobody. The charity is exempt |
The whole advantage is the size of the built-in gain. Shares that have barely moved are worth no more to give than cash is. The position you bought years ago and never touched is the one to look at.
Shares that have lost money are the opposite case
If the stock is worth less than you paid, do not give it away. Sell it yourself, claim the capital loss on your own return, and donate the proceeds. Handing over a loss position gives the loss to an organization that cannot use it.
The One-Year Line
Everything above depends on the holding period. Stock held for more than one year is long-term, and a long-term gift is deductible at fair market value. Stock held for one year or less is short-term, and the deduction is capped at what you paid for it, which strips out most of the point of giving it at all.
The clock runs from the day after you bought the shares to the day the gift is complete. If you have bought the same stock repeatedly, the specific lot matters: pick a long-term lot with a low cost basis, tell your broker exactly which one you are giving, and get that instruction in writing. Shares from a vesting or option event start their own clock on the date you acquired them, not the date they were granted.
How the Deduction Is Valued
For publicly traded shares, fair market value on the date of the gift is the average of the highest and lowest quoted selling prices that day. It is not the closing price, and it is not the price on the day you signed the instruction. A gift that lands on a day the market falls is worth less than one that landed the day before, and there is no fixing that afterwards.
The date of the gift, for an electronic transfer, is the date the shares arrive in the charity’s account. For a paper certificate it is normally the date you put it in the mail, properly endorsed.
Noncash gifts totaling more than $500 for the year go on Form 8283 with your return. Noncash gifts valued above $5,000 usually need a qualified appraisal, but publicly traded securities are specifically excepted from that requirement, which is one of the quiet advantages of giving listed stock rather than something harder to price. Shares in a private company are not excepted, and are a considerably more involved gift.
There is also a ceiling on how much you can deduct in a single year. Appreciated property given to a public charity runs into a lower percentage-of-income limit than cash does, and anything above it carries forward for up to five years. The guide to 50% and 30% limit organizations explains where a given gift lands, and the general rules on itemizing, records and what a deduction is actually worth are in how donating to charity affects your taxes. None of this is tax advice, and a share transfer is hard to unwind, so run your own numbers past your own tax adviser before you instruct anybody.
Making the Transfer, Step by Step
- Pick the lot. Long-term, low cost basis, and a holding you are content to be out of. If you want to keep the exposure, buy the same stock back with cash the same day. The wash sale rule bites on losses, not on gifts of gains.
- Ask the charity for its transfer instructions before you do anything else. You need the receiving brokerage, the account number, the DTC number and the organization’s exact legal name. Do not guess any of it, and do not reuse instructions from a previous year without checking.
- Send your broker a written letter of instruction naming the security, the ticker, the number of shares and the lot. State plainly that the shares are to be transferred in kind, not sold.
- Tell the charity what is coming and roughly when. Shares arrive by electronic transfer with no donor name attached to them. Gifts sit unidentified in charities’ brokerage accounts for months because nobody said they were on the way.
- Get the acknowledgment. It should record the date the shares were received, the number of shares and the name of the security, and say whether you received anything in return. A charity should not put a dollar value on it. Valuing the gift is the donor’s job, and an acknowledgment that names a figure is a warning sign rather than a convenience.
Doing It Before the Year Closes
The gift counts in the tax year the transfer completes, not the year you signed the paperwork. That single distinction ends more year-end gifts than anything else. Transfers between brokerages take days rather than minutes, mutual fund shares often take longer because they may have to move into a matching account at the receiving firm, and the last fortnight of December is the busiest stretch of the year on every transfer desk in the country.
If the deduction is meant to land in the current year, start in the first half of December, and ask your broker to confirm the settlement date rather than the date they accepted your instruction. If it is already late in the month, ask the charity whether there is a faster route before you assume the shares will make it.
Where a Gift of Shares Would Land in Miami County
Miami County Community Foundation is a 501(c)(3) community foundation in Paola, established in 2007 and tax exempt since November 2007 in public IRS filings. Checked against the IRS Exempt Organizations Business Master File on 1 September 2026, it is classified under 170(b)(1)(A)(vi) as a publicly supported charity, which is the classification that decides which of the ceilings above applies to a gift. Its funds are held with First Option Bank, according to its public filings.
The Foundation has not published a securities transfer procedure, so step two of the list above is a real phone call rather than a formality. Say what you are holding and which cause you have in mind, and the Foundation can tell you which fund the gift should go to and how it wants the money routed. Cash gifts today go either through the Donate Now button, which lists the funds open to online giving, or by check made payable to Miami County Community Foundation with the fund named in the memo line, mailed to 702 Baptiste Dr, Paola, KS 66071.
What a gift of that size can start is already defined. An endowed fund opens at $10,000, stays permanently invested and cannot fall below the amount put in, and a 5 percent spending policy makes roughly $500 a year available from a $10,000 fund. An expendable fund opens at $1,000 and can be spent to zero, after which it closes. The fee is 2 percent in total, a 1 percent administrative fee plus a 1 percent community support fee, and setting a fund up takes seven to ten business days. The methods are set out on the ways to give page.
The funds already running are specific. The D.O. Smith Memorial Scholarship is $3,000 for a Miami County student who holds a CNA certification or a place in a nursing program. The Steve Pepoon Memorial Scholarship is $1,000 for a Paola High School senior heading into writing, film, television or theater, named for the Emmy-winning television writer who grew up in Paola. Most awards fall between $500 and $3,000, and almost every one is applied for through the student’s high-school counselor rather than through the Foundation.
Before You Call Your Broker
Confirm the shares are long-term. Get the charity’s transfer instructions in writing. Instruct your broker to transfer, never to sell. Tell the charity it is coming. Keep the acknowledgment with your tax records, and let your preparer see it before the return is filed.
This works for shares in a taxable brokerage account. Money already inside a traditional IRA follows different rules and is usually better given as a qualified charitable distribution, which does not require you to itemize at all.
If the cause is in Miami County, tell the Foundation what you are considering before December gets away from you.
