San Diego Council on Literacy

Planned Giving

Donate by Mail | Planned Giving | Gifts of Stock
Gifts of Real Estate | Gifts-in-kind

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Gifts of Stock

Covered in this section:

1 Giving the gift of stock
2 How stock giving works
3 Easy steps for transferring securities
4 If the securities are in certificate form in your possession
5 Establishing the gift's value
6 Things you need to know

One of the most tax-wise methods of providing current support to The San Diego Council on Literacy is through a gift of long-term appreciated securities.

Gifts of appreciated securities are an excellent way to provide for The Council and the thousands of individuals (children, adults and families) countywide who will all benefit from your charitable contribution. Such gifts can also be used to create planned gifts, which provide you (and your spouse) with an income for life.

Giving the gift of stock
As you consider tax-wise ways of giving to The San Diego Council on Literacy, you may want to analyze the benefits of giving appreciated securities. Long-term appreciated stock (those held longer than 12 months) are particularly beneficial to give because you receive a charitable deduction for the full fair market value of the gift and, in addition, you avoid paying capital gains tax on the appreciation. A charitable income tax deduction is allowed for up to 30% of your adjusted gross income in the year of the gift. Any unused portion can be carried forward for up to an additional five years.

Here is how such a gift works:
Mr. and Mrs. Literacy, who are in the 31% income tax bracket, would like to make a charitable gift to The San Diego Council on Literacy. They are interested in giving some of their stock, which has appreciated greatly over the years. They select stocks with a current value of $2,500, purchased several years ago for $500. By contributing the securities to The San Diego Council on Literacy, they realize a $2,500 charitable deduction, which saves them $775 in income taxes (31% of $2,500). In addition, Mr. and Mrs. Literacy avoid the potential capital gains tax of $400 on the $2,000 appreciation (20% of $2,000). Mr. and Mrs. Literacy's actual cost of the $2,500 gift of stock is only $1,325 (or $2,500 less $775 less $400). In other words, the cost of their gift is only 53% of the face value of the gift. In addition, their taxes may be further reduced because of state income tax deductions.

Easy steps for transferring securities
The rules for transferring securities, while not complicated, are strict. You will want to exercise care to assure that your stock transaction is completed correctly. The same rules apply to giving shares of a mutual fund. Remember, the amount of your deduction depends on the value of the securities on the date the gift is completed. This date may be important for your tax planning, particularly at year-end. If the Securities are held by a Bank, Broker or Mutual Fund Company you should write your bank, broker or mutual fund company a letter which contains the following statement:

You are requested and authorized to make a gift of (number) shares of (name of stock or mutual fund) to The San Diego Council on Literacy (federal tax identification number33-0390376) effective today (date), to benefit the programs of The San Diego Council on Literacy Please transfer these shares to The San Diego Council on Literacy at the Depository Transfer Company ("DTC") to their ____________ account.

The San Diego Council on Literacy, upon receipt of your letter, will promptly contact your bank, broker or mutual fund company to arrange disposition of the stock or mutual fund.

Note:
The gift is complete for tax purposes when the securities are transferred into The San Diego Council on Literacy brokerage account. It does not matter whether the securities are registered in your name, "street name," or certificate form. Your broker and The San Diego Council on Literacy staff will handle the details.

Enclose the Security Transfer Instructions.
Send a copy of your letter to:
The San Diego Council on Literacy
2515 Camino Del Rio South Suite 111
San Diego, California 92108

If the securities are in certificate form in your possession
1. Send your certificate without any endorsement to:
The San Diego Council on Literacy
2515 Camino Del Rio South Suite 111
San Diego, California 92108
along with a letter indicating how you would like your gift to benefit The San Diego Council on Literacy

2. In a separate envelope, send a blank, but signed, stock power and ownership disclaimer form with a copy of the letter that was mailed with your certificate to The San Diego Council on Literacy certificate is negotiable only when joined with the stock power.

Additional information
Regular first-class mail provides for sufficient protection. However, you may send these items by certified mail if you wish. Stock powers and ownership disclaimer forms may be obtained at any bank or broker's office. The gift becomes effective on the date you mail the certificate and the stock power/ownership disclaimer in the U.S. mail. You may hand deliver the certificate to The San Diego Council on Literacy, where you can sign a stock power form and an ownership disclaimer form.

Establishing the gift's value
The gift value of the securities is the average of their high and low prices on the date of the gift. For mutual fund shares, the net asset value (NAV), at the close of business on the date of the gift, is used to establish the value of the gift.

Things you need to know
Pursuant to Internal Revenue Service regulations, the effective date of the gift for valuation and charitable deduction purposes is the date the securities are transferred into The Council's brokerage account. If the transfer needs to be made by a specific date, please allow sufficient time for DTC transfer to take place.

If the certificates are in your name, it is not recommended to have them re-registered in The San Diego Council Literacy's name, as this may take four to eight weeks to achieve.

Please inform broker and The San Diego Council on Literacy before initiating a DTC transfer. Include information concerning security description, shares and transfer initiation date.