Donating stocks and bonds
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Why donate stocks and bonds?
By making a gift using appreciated securities, you can completely avoid capital gains taxes. You can also take an income tax charitable deduction for the fair market value of the shares given to Mass General Brigham.
As always, please be sure to follow IRS rules to benefit from these generous tax savings.
Why this option might be right for you
A gift of publicly traded securities could be a good fit if:
- You own publicly traded securities — if you’re unsure, please consult with your financial advisor
- Some of these securities have increased in value since you bought them
- Some of these securities may provide you with little or no dividends
How it works
To make this type of gift, transfer shares of one or more publicly traded securities, such as stocks, bonds, and mutual funds, to Mass General Brigham. Here are a few tips and best practices to keep in mind:
- Use stocks, bonds, or mutual funds that you’ve owned for at least one year and that have appreciated in value.
- Transfer the appreciated securities directly to Mass General Brigham — don’t sell them. By donating the shares to charity, you’ll avoid paying tax on the capital gain.
- Mass General Brigham, in turn, will sell the shares, and no taxes will be due on the gain. That’s because public charities are exempt from taxes.
- You can take an income tax charitable deduction of up to 30% of your adjusted gross income for the fair market value of the shares transferred. That will save you even more in taxes if you itemize deductions.
- You can carry forward any unused deduction for an additional five years.
Giving options
There are two primary ways to use your appreciated securities to support Mass General Brigham while reducing your capital gains tax:
- Give outright: For an immediate impact, you may transfer shares of one or more publicly traded securities, such as stocks, bonds, and mutual funds, to Mass General Brigham.
- Establish a life income gift: You may make a gift of appreciated securities and receive payments for life.
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Frequently asked questions
Donating securities has several tax benefits:
- Income tax benefit: When you donate securities that you have had for more than one year, you may deduct from your taxable income the full fair market value of the securities as of the date of your donation, provided you itemize your deductions. Your deduction is limited to 30% of your adjusted gross income.
- Capital gains tax benefit: Donating publicly traded securities that you have owned for more than one year and that have increased in value allows you to donate without reporting any of the capital gain in the securities. Selling these securities publicly would cause you to owe tax on the capital gains. The chart further down this page shows how making a gift with appreciated stock can save substantially more taxes than making the same size gift with cash.
You can either make an outright gift of your securities to Mass General Brigham or establish a charitable gift annuity, which will provide you and us with payments for life. Here's how that works:
- You transfer securities to the life income plan.
- A gift of appreciated securities to a charitable gift annuity, charitable remainder trust, or pooled income fund will typically defer or, in some cases, completely avoid capital gain from your gift of securities.
- During the term of the life income plan, you receive payments from the plan each year, typically for life.
- When the life income plan ends, its remaining principal goes to support Mass General Brigham.
Understanding your savings
The chart below shows how making a gift with appreciated stock can save you substantially more on your taxes than making the same size gift with cash.
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Cash gift
Stock gift
Gift value
$20,000
$20,000
Income tax deduction
$20,000
$20,000
Income tax saved (37% rate)
$7,400
$7,400
Purchase price
-
$5,000
Increase in value ($20,000-$5,000)
-
$15,000
Tax avoided on gain (20% rate x $15,000)
-
$3,000
Total tax savings
$7,400
$10,400
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