Donating Appreciated Stock: How to Maximize Your Charitable Impact and Minimize Taxes
Most people donate cash. Savvier donors give appreciated stock. If you have investments in a taxable brokerage account that have grown significantly, donating those shares can reduce your tax bill and increase the amount your favorite charities actually receive.
Here’s the short, strategic guide to how it works and why it’s powerful.
Why Donating Stock Beats Donating Cash
When you donate long-term appreciated stock (held over a year), you unlock two tax benefits:
Deduct the full fair market value of the shares.
Avoid all capital gains tax on the appreciation.
Example: Stock you bought for $3,000 is now worth $10,000.
Donate the shares and you deduct $10,000 while avoiding tax on $7,000 of gains. This is far more efficient than selling the stock, paying tax, and then donating the after-tax amount.
When This Strategy Makes Sense
It’s especially useful when:
You itemize deductions
You have concentrated positions or large unrealized gains
You want to give during a high-income year (bonus, RSU vesting, business profits)
You regularly donate to charity and want to do it more efficiently
This is one of the clearest “smart money” moves available to generous taxpayers.
Using a Donor Advised Fund Makes It Easier
Most charities cannot accept stock directly. Donor Advised Funds (DAFs) solve this.
With a DAF:
You transfer appreciated shares
You get the deduction immediately
The DAF sells the stock tax-free
You grant to charities over time
Clean, simple, and flexible.
Step-by-Step: How to Donate Appreciated Stock
Identify long-term shares with significant gains.
Transfer the stock to your DAF or directly to the charity.
Receive a written acknowledgment.
If you want to keep the position, rebuy the stock the same day to reset your cost basis higher.
It’s an efficient tax move and a portfolio management upgrade in one step.
Common Pitfalls to Avoid
Donating short-term positions (less favorable tax treatment)
Waiting until late December, when transfers can bottleneck
Selling stock first, then donating cash (you lose the benefit)
Planning ahead preserves the full value of the strategy.
Bottom Line
Donating appreciated stock is one of the easiest ways to give more while paying less tax. It maximizes your deduction, eliminates capital gains, and helps you support the causes you care about with more intention.
Ready to Upgrade Your Giving Strategy?
If you want help choosing which assets to donate or tying your charitable giving to a broader tax plan, I can walk you through the exact steps.
Schedule a consultation to turn your generosity into a smarter, more tax-efficient strategy.