Posts tagged ‘capital gains tax’

January 27, 2017

Your #Charity is Losing Big Money If It Ignores This Giving Option

If you’re like most fundraising professionals, you’re ignoring one high-potential giving option. Sadly, it could be costing your nonprofit organization a fortune.

I’m talking about gifts of appreciated securities (e.g., stocks).

The Wall Street Bull.

The Wall Street Bull.

Just days ago, the Dow broke through the 20,000 level to set a new record close. The NASDAQ and the S&P 500 are also in record territory. As stock values have continued their post-election rally, many more Americans now hold appreciated stocks.

In 2016, 52 percent of Americans said they owned stocks in some form, according to Gallup. While that’s down from the 65 percent who owned stocks prior to the Great Recession, a majority of Americans still hold stock, directly, in mutual funds, and in retirement accounts.

Given that most Americans own stock and many of those stocks have appreciated in value, the nonprofit sector has a tremendous opportunity.

Contributing appreciated stocks provides donors with some important benefits:

  • It gives donors access to a pool of money with which to donate that would not otherwise be available to them for other purposes without negative tax consequences.
  • Contributors who donate appreciated stocks may be able to avoid paying the capital gains tax on those securities.
  • Donors may also be able to take a charitable-gift tax deduction based on the value of the stock donated.

Given the benefits for the donor and the nonprofit organization, I’m puzzled about why more charities aren’t stepping up to promote gifts of appreciated securities.

I know. I know. You’re organization’s website probably mentions this giving option in passing. For example, my alma mater Temple University promotes gifts of appreciated stock and mutual funds on its website. Unfortunately, it takes three clicks from the Home Page to find the 82-word statement buried on the vaguely named page “More Ways to Give.” I suppose that’s a bit better than the charities that don’t mention this giving option at all.

On the other hand, the American Civil Liberties Union does a better job of promoting stock gifts on its website. Furthermore, unlike Temple University, the ACLU site provides all of the information and instructions a donor will need in order to make a gift of stock.

To help donors understand the value of donating stock, The National Philanthropic Trust, which manages Donor Advised Funds, includes a hypothetical case study on its website to illustrate the value of donating appreciated stock.

Savvy donors, perhaps more donors than in recent years, are already benefitting by donating appreciated stocks.

For example, NPT saw an increase of stock gifts last year. Eileen Heisman, NPT’s President and CEO, reports:

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July 7, 2016

Should You Worry about Election-Year Tax Plans?

As Americans, we should be generally concerned with who our next President will be. The outcome has both personal and professional implications for you, even if you’re one of my international readers.

Presidential Seal by Jason Seliskar via FlickrWho will be best for the future of the nation and the world? Who will voters elect?:

Whether you’re a nonprofit manager, fundraising professional, and/or donor, you should also be concerned about which of the candidates will be best for the charity sector. Government policies, particularly tax policies, can have a significant impact on charitable giving.

If new government policies lead to greater economic growth, nonprofit organizations will likely benefit. Giving USA has shown that charitable giving consistently correlates to roughly two percent of Gross Domestic Product. So, if the nation experiences more robust economic growth, we can expect more robust philanthropic growth. The converse is also true.

If new government policies lead to greater personal income, nonprofit organizations will likely benefit as Giving USA has revealed that giving also consistently correlates to approximately two percent of personal income.

So, which Presidential candidate is best? Well, that’s a simple question with a complex answer. Evaluating the potential impact of each plan will never generate a consensus among economists. Furthermore, it’s doubtful that any of the plans will be adopted as presented. Congress will still have its say. And Speaker of the House Paul Ryan has introduced his own tax proposal.

While I will not tell you which candidate will be best for the country and the nonprofit sector — I don’t happen to own a crystal ball — I will provide you with a few key, relevant highlights of each plan. I hope you’ll then take the time to learn a bit more about each candidate and his/her proposals so that you can make an informed choice this November and be prepared when change arrives.

I also encourage you to visit the seemingly non-partisan website I Side With to take a quiz that will match your answers with the positions the candidates have taken on a variety of issues. At the conclusion of the quiz, you’ll be told how your positions align with those of each of the candidates. The results might surprise you. If you’re one of my international readers, I still encourage you to take the quiz to see how our presidential candidates align with your values so you’ll know who to root for.

Now, let’s take a brief look at some of the highlights from the various tax proposals:

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May 17, 2013

A Donor Offers You $5,000. Now What?

Congratulations! You’ve done everything right, so far. As a result, a prospect has offered to write a $5,000 check to your nonprofit organization. She only has one question: “Who should I make the check out to?”

So, what should you do next?:

A. Let loose with an enthusiastic, sincere, “Whoohoo!”

B. Thank the donor and tell her the proper name of the organization for the check.

C. Tell the donor the information is on your organization’s website.

D. Thank the donor, tell her the proper name of the organization for the check, and then say, “And, let me just ask, if I may, do you have any appreciated stock?”

Check SigningIf you’re like most development professionals, you probably answered “B.”

While that’s not exactly a wrong answer, there is a better one that will be more helpful for the donor and for your charity: “D.”

Sadly, many development professionals wrongfully assume that all donors of means know, at least, the basics of financial planning and tax avoidance. However, that’s simply not the case.

Sometime ago, I served on the board of a nonprofit organization. At one of the charity’s events that I attended, a modest donor came over to me and expressed an interest in donating $5,000. She simply needed to know the organization’s official name so she could put it on the check.

As in the above scenario, after thanking her and providing the information, I asked if she had any appreciated stock.

Puzzled by my question, she replied, “Yes, I do. Why do you ask?”

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January 3, 2013

Special Report: Everything Each NPO Must Know about Fiscal Cliff Legislation

A dysfunctional White House and Congress officially took the United States over the so-called “Fiscal Cliff” at the close of December 31. Fortunately, a deal was reached late on New Year’s Day, hopefully averting what economists say would have been an almost certain return to deep recession.

Since the American Taxpayer Relief Act of 2012 was passed, there’s already been a great deal of confusion and misinformation about what the Act means to the nonprofit sector. 

Thankfully, Brian M. Sagrestano, JD, CFRE, a consultant and co-author of Philanthropic Planning Companion: The Fundraiser’s and Professional Advisors’ Guide to Charitable Gift Planning, has written a careful and thorough analysis of the 157-page Act with particular attention to: income taxes, long-term capital gains and qualified dividends, gift and estate taxes, the IRA Charitable Rollover, and other provisions. He also predicts the impact the Act will have on philanthropy and provides some important tips for all nonprofit organizations.

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