The following FAQ has been written to inform donors regarding the ins and outs of giving appreciated securities. We hope you find it informative. If you have a question that we have not answered, please submit a comment at the bottom of this page.

While every effort has been made to ensure their accuracy, the answers are of general application and are not intended to be a substitute for legal, tax, or investment advice.

What types of securities can I donate?

Publicly-traded stocks, bonds, or listed options held at your brokerage firm; mutual funds; publicly-traded stock certificates that you hold personally; and publicly-traded stock held in “book entry” form at the issuing company are all acceptable securities to donate to charity.

What general tax guidelines should I follow?

First, consider giving securities from your portfolio that have the greatest appreciation. That way, you’ll avoid the greatest amount of capital gain.

Second, consider giving securities such as stocks and mutual funds you have owned for at least one year. Because they will be considered long-term capital property, you can claim an income tax charitable deduction for their full fair market value.

If you donate stocks or mutual funds you have owned less than one year, they will be considered short-term capital gain property. If you sell these securities, you gains are subject to tax at ordinary income tax rates. If you donate them, you will avoid this tax; however, your deduction will be limited to the lesser of their fair market value and the amount you paid for them.

Finally, don't donate securities that have gone down in value since you purchased them. That's because you can't claim a capital loss on donated property. As an alternative, consider selling them first and donating the cash proceeds. That way, you can claim a capital loss that can be used against other capital gains and claim a deduction for the cash donation. We recommend you consult your tax advisers to determine the best securities to donate.

What if I think the securities I am donating are still a good investment?

If you have a choice between giving cash or highly appreciated securities, consider donating the securities even if you think they are still a good investment. Then use the cash you would have donated to purchase new securities. You will enjoy the same tax deduction and a new tax basis in your newly purchased securities.

Can I donate stock held in my IRA or other qualified retirement plan?

If you are at least 70½ and meet other requirements, you can make tax-free charitable distributions directly from your traditional IRA or Roth IRA and exclude the distribution from your taxable income. Otherwise, the distribution may be considered taxable income and you will have to claim an offsetting charitable income tax deduction. For this reason, the best securities to donate are usually ones you hold outside of your IRA or other qualified retirement plans.