When donating stock, most people simply transfer the stock directly to United Way as described below rather than selling it. This allows you to claim a charitable contribution on the day of the transfer to United Way as well as not having to pay the capital gains tax on the securities. United Way will be responsible for any fees related to the sale of the stock.
Below is information on making a gift to the United Way using a stock transfer:
1. Identify the stock you want to donate.
2. Contact your Investment Advisor and send a written request that shares will be transferred into United Way of Central Maryland’s account. (Stock certificates do not need to be put in United Way’s name.)
3. Send a copy of the letter to Donor Services-Stock, Attn: Kelly Miller, United Way of Central Maryland, 1800 Washington Blvd., Ste. 340, Baltimore, MD 21230 to inform us of the transferred shares. We will contact the investment advisor regarding the immediate sale of the shares.
4. If you are donating stock certificates, please sign the back of the certificate(s) and submit with a brief letter stating the amount of shares and what type of stock is being donated to the previously stated address.
5. United Way of Central Maryland will send you a receipt for the mean value (average of the high and low price) of the shares on the date the shares are received in United Way’s account.
6. United Way has accounts with most major firms. Please click here for a list of our preferred Investment Advisors.
Questions may be directed to Kelly Miller, Donor Choice Administrator, at 410.895.1432 or firstname.lastname@example.org.
Income tax laws encourage contributions to public charities like United Way by providing, within the tax code, income tax deductions donors who itemize their federal tax returns.
Donors can make gifts at reduced costs; for example, if you make a cash contribution of $10,000 to United Way, you may claim a deduction of $10,000 on your income tax return. In this scenario, if you are in the 39.6 percent marginal income tax bracket, you will reduce your overall federal tax liability by $3,960.* In effect, you can give $10,000 to United Way at a cost to you of $6,040. Similarly, if your gift was in appreciated stock as shown in the chart, with a cost basis of $3,000 (therefore a gain of $7,000), the cost to you would still be $6,040, which is far better than selling the stock directly and paying the capital gains tax.
Long-term appreciated stock gifts are deductible at their full fair market value for both federal and Maryland income tax. There is no capital gains tax due on the appreciated portion.
The ability to avoid tax on capital gains at both the federal and state level makes gifts of appreciated securities particularly attractive to donors. Of course, any of these contributions will be valuable to our community and will support individuals and families in helping build better lives.
Assumes a $3,000 cost basis on gifted stock (therefore a gain of $7,000).
*There may be additional savings in avoiding Maryland state income tax. Charitable gifts are subject to the deduction limits set by the Internal Revenue Code. Any excess deduction can be carried forward over an additional five years. Additionally, charitable contributions are subject to the phaseout of itemized deductions for certain high income taxpayers. This material is intended to be illustrative only; we always encourage individuals to review their plans with their own tax counsel to ensure that their particular circumstances are fully considered when calculating the tax consequences of any charitable gift.
**Benefit of stock gift to United Way is avoidance of capital gains tax. A copy of the most current financial statement is available upon request by contacting United Way of Central Maryland, Inc. at 1800 Washington Blvd., Ste. 340, Baltimore, MD 21230 or 410-547-8000. Documents and information submitted to the State of Maryland under the Maryland Charitable Solicitations Act are available from the Office of the Secretary of State for the cost of copying and postage.