How Can My Company Accept Securities (Stock) Donations?
Stock donations and securities are a great way of channeling more revenue for your company goals. You can get these donations if you are a non-profit organization. However, helping others does have its perks. Let us have a look at some of the most amazing advantages of making a stock charity. These advantages will help you understand the system better.
What Are The Advantages Of Stock Donations
Fidelity Charitable claims in a report from 2018 that 80% of the donors have appreciated stocks. However, just 21% of these donors use these assets in charity. It is quite shocking to see considering all the amazing benefits of making stock donations. You should take a look at these benefits below, if you aren’t aware of them.
Give More Than You Intend To
Not many people know this but, if you donate a stock appreciated for a year, then you give 20% more. It helps you avoid capital gain taxes ultimately allowing you to give 20% of the original charity value. This federal tax is on all long holdings meaning that this simple step could make you donate more.
You should also reduce the full fair market price from your income tax. You can reduce this amount up to the maximum amount IRS allows. You can also list restricted stocks such as Bitcoin as charity too because there is no prohibition on them.
Reduce Future Capital Gains
Appreciating a stock shows your belief in it. You can appreciate it and then reset your original amount after saving on capital gains. This way you will do something good while benefiting yourself financially in the long run. Therefore, you should sell some of your appreciated stocks and then buy new ones. You can also reduce your future tax exposure if you keep saving on capital gains.
Every portfolio indicates it’s time to improve and restore the risk factor to it. If you come across such a point with your company; then, charitable stocks is the right way to go. You can put your capital gains to use and aid your philanthropic image for your business. If you are not sure what assets are ideal for this then you should consult a professional advisor for it. It will also help you reduce the concentrated positions on your portfolio and contribute a smaller part of it better.
Most of the donation process involves a lot of work which is why most people are reluctant towards it. However, you can come up with a donor-advised account to make things easier for yourself. You can use these accounts to support charities better and with lesser paperwork. It is alright if you do not know which charity you could donate to because you can take your tax reduction and then decide in peace. All of this will make stock donations faster and far more efficient.
Should you Accept Stock Donations?
If you are looking forward to accepting stock donations for your charities, we fully support you. However, you should know that not all organizations can take this stock to charity. You need to know that you have to fulfill the tracking and recording standards set by IRS for this. It will help you get relief by maintaining your 503 status easily.
We have compiled a step-by-step guide to help you with this task. We will cover everything there is to know about accepting these stock donations to make things easier for you. So let us begin.
Three Steps to Accept Stock Donations
Accepting stock donations involves the following three steps:
1. Setup an Account
You should first make a brokerage account by fulfilling all the requirements for it. Next, you should focus on an investment policy so that you know how you are going to do it. You also need to come up with a donor donation form to help them fill the requirements for it.
2. Make Records of Transactions
Once you have received the donation amounts, you should make records and tracking of them according to IRS guidelines. It will help you regulate the stocks better and manage everything smoothly. Also, make sure to monitor these transactions daily to avoid problems and false claims.
3. Acknowledge the Donations
Lastly, you should acknowledge all the donations made by the stock donors. You can add a thank you letter and other formalities. Lastly, you should ensure that you add all your stock donations to your taxes.
Accepting securities and stocks can be a lot of work which is why you should take things slow. We hope that this guide helps you manage your stock donations better. You can find more tips and guides for the topic on our website.