Anthony Saffer VP / Financial Advisor CFP®, CKA®,

Alex Okugawa  / Financial Advisor CFP®, CKA®, CEPA® 

Alex Okugawa 0:00
If you want to make an impact with your wealth and maximize your tax savings, today, we’re talking about gifting appreciated shares to charity. And if you’re not taking advantage of this opportunity, you could be missing out on big tax savings.

Alex Okugawa 0:24
Alright, Anthony, so investment markets are up. And of course, this presents a great opportunity to gift appreciated shares, which is very tax efficient. So let’s just start at the beginning. What is the overall goal? And why are we even considering this strategy in the first place?

Anthony Saffer 0:39
Right? How do most people give to charity?They write a check, maybe they’ve sold an investment in order to produce that cash to be able to give, and we would say, consider giving the shares directly to the charity, right? And in that way, you can avoid the capital gain because the charity can sell it tax free, whereas you’re paying tax if you sell it first.

Alex Okugawa 0:58
Absolutely. So sounds like a great idea. But let’s talk about where the rubber hits the road. How do we actually do this, in practice?

Anthony Saffer 1:04
Many larger charities are equipped to be able to receive stock or other assets that are appreciated, we work with charities that are that are ready, they have a brokerage account, if a donor comes to them with a stock, a lot of smaller charities, however, just don’t have the capacity for that ype of thing. But that’s not the end of the road, because you can control it as the donor. In fact, a donor advised fund through a Community Foundation is a great way to implement this.

Alex Okugawa 1:04
And of course, one of the reasons why we’re talking about this strategy in the first place is changes to tax law, which can change your tax situation,

Anthony Saffer 1:33
Back in 2018, itemized deductions, where you’re getting a deduction on your charitable giving, your mortgage interest, all those types of things, severely went down a lot fewer people are actually itemizing because the standard deduction went much higher. And so being very strategic with your charitable giving is a big part of that. Giving appreciated shares. We also talked in a previous video about stacking your charitable giving, which we’ll post the link to as well, all those things and coming up with a plan that’s unique for you to be able to maximize that is really important.

Alex Okugawa 2:03
So when we present this strategy to clients, a common argument we’ll hear against this is, well, I don’t want to sell or gift away XYZ investment. Right? It’s done so well. And it’s grown by so much. If I give it away, than I won’t be able to get any more of that growth. And what we’re seeing right now is that’s not necessarily the case.

Anthony Saffer 2:22
Yeah, in fact, when it has done well, that’s when you really want to pay attention and be thinking about this, I just had this conversation with a client the other day, he has a stock that’s gone up quite a bit. We talked about giving shares over and then what he’s going to do is repurchase the shares with the cash that he has on hand. So he accomplishes two things. he avoids the capital gain on the stock, while still getting the deduction, and then he’s repurchasing those shares, he’ll own the exact same amount, and he also owns them at the higher cost basis. So if he does go to sell those shares later, he’s created much more tax flexibility for himself.

Alex Okugawa 2:55
It’s way more tax efficient. Again, giving cash to charity can be a way to get a charitable deduction. And we’re not saying that taxes are the only reason why you should and do give but what we are saying is if you are going to give, make sure you do it tax efficiently. This is the kind of stuff that we help folks with, with their investments, tax strategies, and financial planning. Again, this is not tax advice. You do want to talk with your tax advisor. But if you’d like to learn more, visit our website or give us a call. We’d love to talk with you.

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More Reading: Stacking Charitable Giving to Maximize Tax Breaks

This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. See our website at onedegreeadvisors.com for full disclosures.