The Smart Donor's Secret: Why Giving Stock Can Be Better Than Cash
- Dylan Rusch
- Jul 24
- 3 min read
A Guide to Maximizing Your Impact While Minimizing Your Taxes
What Is Appreciated Stock Giving?
Appreciated stock giving means donating shares of stock, mutual funds, or ETFs that have increased in value since you purchased them. Instead of selling the investments and giving cash, you transfer the securities directly to the charity.
The Key Requirement: You must have owned the securities for more than one year to qualify for the full tax benefits.
Real Numbers: The Difference Is Dramatic
Let's look at a real example:
The Stock:
Original cost: $10,000
Current value: $35,000
Capital gain: $25,000
Tax bracket: 24% ordinary income, 15% capital gains
If you sell stock and give cash ($10,000 gift):
Sells $11,765 worth of stock
Pays $1,765 in capital gains taxes (15% of $11,765 gain)
Has $10,000 cash to give to KML
Gets $10,000 charitable deduction
Net tax benefit: $1,635 (24% of $10,000 deduction minus $1,765 capital gains)
If you give stock directly ($10,000 gift):
Gives $10,000 worth of stock to KML
Pays $0 in capital gains taxes
Gets $10,000 charitable deduction
Net tax benefit: $2,400 (24% of $10,000 deduction)
Your advantage: You save an additional $765 in taxes by giving stock instead of cash!
But Wait—It Gets Even Better
Since you save money by giving stock, you could actually increase your gift without increasing your out-of-pocket cost.
What if you give $15,000 worth of stock?
Gives $15,000 worth of stock to KML
Donor pays $0 in capital gains taxes
KML gets $15,000 charitable deduction
Net tax benefit: $3,600 (24% of $15,000)
Donor’s actual cost: $11,400 ($15,000 gift minus $3,600 tax savings)
Compare this to the original plan of giving $10,000 cash (which would cost $8,365 after tax savings). For just $3,035 more out of pocket, you increase your gift to KML by 50%!
Why This Strategy Is So Powerful
1. Double Tax Benefits
You avoid capital gains taxes (that you would pay if you sold the stock)
You get a charitable deduction for the full current value
2. More Impact for Less Cost
The charity receives more
Your out-of-pocket cost is lower
Everyone wins
3. Perfect for "Surprise" Gains
Had stocks perform better than expected?
Inherited appreciated securities?
This strategy turns that good fortune into even greater generosity
What Types of Securities Work?
Excellent candidates:
Individual stocks held over one year
Mutual funds and ETFs with gains
Inherited securities (which get a "stepped-up basis")
Common Questions From KML Families
Q: "What if I want to keep some of that stock?" A: Give the appreciated shares to KML, then use the tax savings to buy new shares at the current market price. You'll have the same investment position but with a higher cost basis for future tax purposes.
Q: "Is this too complicated?" A: It's actually quite simple. Your broker can transfer shares directly to KML or the KML Foundation's account. The process typically takes 3-5 business days.
Q: "What about timing?" A: Stock gifts are valued on the date the charity receives them, not when you initiate the transfer. For year-end gifts, start the process early in December.
Ready to Explore Your Options?
Every portfolio is different, and every family's situation is unique. If you have appreciated securities and are considering a gift to KML Foundation, we'd love to help you explore whether stock giving might be a good fit.
Contact Dylan Rusch at dylan.rusch@kmlhs.org or 262-677-4051 x4093 for a no-pressure conversation about your giving options.
Important Note: This information is educational and not personalized tax or investment advice. Always consult with your tax advisor, financial planner, or attorney before making significant financial decisions.
The KML Foundation manages over $3.7 million in endowment funds that provide tuition assistance and college scholarships for KML students. Every gift, whether cash or securities, helps ensure that families can afford a Christ-centered education where students hear the Gospel every day.
Questions about estate planning, planned giving, or other ways to support KML? Visit foundation.kmlhs.org or contact Dylan Rusch, Gift Planning Officer.
