Coming off a year with S&P 500 returns of 11% plus gives many investors the opportunity to rebalance their portfolios. But what about incurring capital gains? If you make charitable donations to your church, you may want to consider giving appreciated stock instead of cash. Although you may be aware of this option you may not be aware of the necessary steps to implement this strategy successfully.
Step 1: Determine if your church has an account with a financial institution to accept stock gifts.
Step 2: Obtain the transfer information from the church’s financial institution.
Typically your church treasurer will have access to this information. This transfer detail includes the DTC routing number as well as the church account number and exact account registration.
Step 3: Determine the 2015 annual amount you will give to your church. Ask you financial adviser which appreciated stock and how many shares you will need to donate to meet your annual giving goal.
For many people the idea of giving a one-time lump sum robs them of the satisfaction of giving during weekly church services. You may want to consider deducting $260 from the total so that you can continue to give a nominal weekly amount of say $5.
Step 4: Forward the transfer information to your financial adviser so that they can prepare an authorization form to transfer the stock to your church’s brokerage account. You will need to sign the appropriate paperwork to initiate the transfer.
Step 5: Have your financial adviser prepare a letter to be sent to your church so that they are aware of the stock transfer as well of the stock price on the day of the transfer.
This is a vital step that is often overlooked. Unfortunately there is no way to identify the stock with your name when it transfers into the church’s brokerage account. Upon receipt of the gift, the church will need to send you a donation acknowledgement letter. The IRS requires this letter for any gift over $250 so it is important to keep it with your tax records.
This is one of the many value added services where your financial adviser can assist.