Donating Stock to Veterans

Donating appreciated stock to a qualified 501(c)(3) nonprofit is one of the most tax-efficient charitable gifts available. For long-term appreciated securities, you get a deduction for the full fair market value and avoid the capital gains tax you'd owe on a sale. On highly appreciated holdings, that combination can nearly double the effective value of the gift compared to donating cash.

Here's how it works and how to do it.

The Two Benefits Stacked

Two things happen when you transfer appreciated stock directly to a nonprofit:

1. Capital gains tax is avoided. You never sell the stock, so the appreciation is never taxed. Under current law, long-term capital gains rates are 0%, 15%, or 20% federal, plus the 3.8% Net Investment Income Tax for higher-income filers, plus state tax.
2. You get a charitable deduction for the fair market value of the stock at the time of transfer — not just your cost basis.

The comparison to selling and donating cash: if you sell $10,000 of stock with a $2,000 cost basis, you owe capital gains tax on the $8,000 gain (say $1,200 federal). You then have $8,800 to donate. If you donate the stock directly instead, the charity receives $10,000 and you deduct $10,000.

That's the core reason stock donation is so tax-efficient for appreciated positions.

Requirements for the Tax Benefit

For the full-fair-market-value deduction to apply, the stock must be:

• Long-term (held more than one year)
• Appreciated (worth more than your cost basis)
• Publicly traded securities (traded on an established exchange)
• Transferred directly to the charity (not sold and then donated in cash)

If the stock is held one year or less (short-term), the deduction is limited to cost basis. If the stock has declined in value, you're generally better off selling (recognizing the capital loss) and donating cash.

AGI Limits

Publicly traded stock donations to public charities are subject to a 30% of AGI limit in the year of the gift. Amounts exceeding the limit carry forward for up to five additional tax years (About Publication 526).

Cash donations to public charities are subject to a higher 60% AGI limit — so for very large gifts relative to income, cash may allow a higher current-year deduction. For most donors making stock gifts, the 30% limit is not a constraint.

Publicly Traded Securities: No Appraisal Required

One significant advantage of stock donations over other non-cash gifts: publicly traded securities are exempt from the qualified appraisal requirement, even for gifts over $5,000. The valuation is determined by market data — the mean between the high and low quoted prices on the transfer date.

You do still need to file IRS Form 8283 if your total non-cash contributions for the year exceed $500, but Section A only (About Form 8283). No appraisal, no appraiser signature.

How to Transfer Stock

Stock donations are typically made through your brokerage account by DTC transfer to the charity's brokerage account.

The general process:

1. Contact the charity to obtain the transfer instructions — brokerage name, DTC number, and account number.
2. Contact your broker and provide the transfer instructions. Ask for a DTC transfer (not a sale followed by a cash gift).
3. Complete the broker's donation authorization (usually a simple form).
4. Notify the charity that the transfer is pending, so the securities are properly credited to your donation.
5. Wait for confirmation. Most transfers complete in 1–5 business days.
6. Retain your records — the transfer confirmation, the charity's acknowledgment, and the value determination.

The transfer date is generally the date the securities arrive in the charity's account, not the date you requested the transfer. This matters for year-end giving — start the process well before December 31 to ensure completion in the current tax year.

What Kinds of Securities?

Publicly traded stocks, ETFs, and mutual funds all work for direct transfer. Bonds can also be donated, with similar tax treatment.

Restricted securities, closely held stock, and privately held business interests follow different rules — a qualified appraisal is generally required, and the transaction is more complex. These situations warrant a conversation with the charity's development team and your own tax advisor.

What the Charity Does With the Stock

Most nonprofits sell donated stock promptly rather than holding it — the mission is program funding, not portfolio management. Because the charity is tax-exempt, the sale doesn't generate a tax liability regardless of the appreciation. The proceeds go into program work.

For Salute Veterans Inc., proceeds from stock donations support veteran programs.

Documentation for Your Records

The IRS expects donors to retain:

• The transfer confirmation from your brokerage
• The written acknowledgment from the charity confirming the donation and 501(c)(3) status
• Form 8283 Section A for filing with your tax return
• Records of your cost basis and holding period (broker statements)

Timing and Year-End Considerations

For a donation to count in a given tax year, the transfer must complete by December 31. Broker processing times vary, and end-of-year is the busiest period for both brokerages and charities. Start stock transfers no later than mid-December to ensure completion.

For donors making regular annual gifts of appreciated stock, some establish a routine — same time each year — to avoid the year-end rush.

Donor-Advised Fund Alternative

If you want to donate stock now but decide later which charities to support, a donor-advised fund (DAF) can be useful. You transfer stock to a DAF sponsor (Fidelity Charitable, Schwab Charitable, Vanguard Charitable, Salute Veterans Inc.'s DAF partners), take the deduction in the transfer year, and recommend grants to specific charities over time. See Using a Donor-Advised Fund for details.

Disclaimer

This article provides general information about how stock donation works — not personalized tax advice. Tax outcomes depend on your filing status, income, cost basis, other deductions, and the specifics of the transfer. Consult a tax professional and your brokerage for guidance on your particular situation.

Ready to Donate Stock?

Stock donation is one of the most impactful ways to support U.S. veterans — the tax efficiency means more of your gift reaches program work. See Are Veteran Donations Tax-Deductible? for the general framework, and contact us to arrange a stock transfer to get started.

You can also learn more at DonateStocks.org.