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Keep your eye on clients' appreciated stock

Stock graph on smart phone with coffee and laptop in the background

Many advisors will recall that by August 2022, markets were down 12% for the year and inflation was up 8.3% year-over-year. Perhaps consequently, annual charitable giving was on its way to a rare (fourth time in 40 years) year-over year decline of some 4% according to Giving USA. Certainly this decline was due in part to donors not wanting to give stock at depressed values.  

Nearly 12 months later, as of July 2023, markets were up 7.28% year to date and inflation was roughly half at 4.7% year-over-year. Even though the stock market still shows signs of volatility, we're hopeful that charitable giving will rebound. 

No matter the times, and even in down markets, some stocks will still out-perform. These holdings are of course excellent candidates for your clients to give to charity and avoid taxes on the capital gains. This year is no different, with stocks like Microsoft, Apple, Nvidia and others enjoying banner years. Indeed, Microsoft, Apple and Nvidia were up 38%, 36% and 228%, respectively, through mid-August. For some of your clients, these gains have created concentrated stock positions where you, as an advisor, may believe that portfolio allocations have become imbalanced under the investment strategy you are pursuing. Your clients who support charities through their donor-advised funds at the community foundation can consider potentially alleviating this situation through charitable gifts of highly appreciated stock.

Clients who give appreciated stock to a donor-advised fund can: 

  • Enjoy the ease of the donor-advised fund as an account for current and future charitable giving
  • Conveniently support the causes they and their families care most about 
  • Benefit from an up-front income tax deduction, avoid capital gains on the assets' sale within the fund, and grow the proceeds for future grantmaking
  • Leave a legacy for children and grandchildren to continue their philanthropic commitments
  • Reduce the value of their taxable estate, potentially reducing estate taxes
  • Comply with IRS charitable gifting guidelines
  • Enjoy supporting charities in the client's name, the fund's name, or anonymously
  • Reduce paperwork headaches during tax season by consolidating their giving into a single fund

By establishing a donor-advised fund at Akron Community Foundation, your client is part of a community of giving and will have opportunities to collaborate with other donors who share their interests. In addition, your client is supported in strategic grantmaking, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference. 

So while it's nice to see the market's performance improve, a bonus opportunity lies in your clients' ability to transfer appreciated stock to donor-advised funds at the community foundation. We are here to help! 

For more information about how we can help you serve your philanthropic clients, contact Laura Lederer. We're always available to answer your questions about philanthropy or to schedule a personal consultation with you and your clients – all at no cost.

Additional Resources

This content is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.

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