In Matthew 6:20 Jesus encourages us to “…lay up for yourselves treasures in heaven…” One of the most basic ways that we can apply this teaching is to give generously of our financial resources to Kingdom ministry. What if there was a practical way that you could both give to Kingdom ministry, and reduce your taxes legally, morally, and ethically? If you own shares of appreciated stock (stock that has increased in value over your purchase price), you may be able to accomplish both by donating the shares of stock to a qualified ministry.
How This Benefits You
In addition to the eternal rewards of giving to the Lord’s work, you can benefit tangibly from a tax perspective in two ways.
First, it lowers taxable income. Those shares of appreciated stock that you own will generate a taxable gain to you when you sell them, called “capital gains tax”. If instead however, you donate the actual shares of the stock to a ministry, you never pay capital gains tax on these donated shares. Understand that to be eligible to receive this particular tax benefit, you must donate the actual shares to the ministry, and NOT sell them for cash prior to making the donation.
Second, it increases potential charitable deduction. When you donate the shares of stock, you are generally eligible to receive an income tax deduction for the full market value of those donated shares. These same benefits apply if you donate appreciated mutual funds.
How This Benefits the Ministry
When the ministry receives the shares of stock, they can immediately sell the shares of stock to cash. Since churches are tax-exempt, they don’t have to pay the capital gains taxes on the sale that you would normally have to pay. Therefore 100% of the proceeds from the sale can be used towards the work of the ministry.
Making it Happen
Do you own shares of appreciated stock and have a ministry in mind that you would like to donate them to? First, find out if the ministry has a brokerage account established. A brokerage account is the type of account that is needed to receive the donated shares. If they do not currently have a brokerage account, we would be happy to assist in setting one up. Second, contact your Financial Advisor and/or the custodian of your account, to start the process of transferring your shares. Your advisor should walk you through the remaining steps in completing the transfer process.
If you have more questions or would like additional information on how to make this happen, please contact The Life Financial Group. We would be honored to help you take your next steps in wise stewardship and generosity towards the local church.
Article written by Jeremy Ehst, CFP®
Securities and Advisory Services offered through Geneos Wealth Management, Inc. Member FINRA and SIPC