Charitable giving is about more than helping your favorite causes, it can also be a smart financial strategy. Many investors default to writing checks when supporting a charity, but donating appreciated stock can offer powerful tax advantages and increase your contribution and impact.

At James Investment, we encourage our clients to give thoughtfully and tax-efficiently. Here’s how to determine whether donating stock or cash makes the most sense for your situation.

The Traditional Route: Cash Donations

Cash is the most straightforward way to give. When you donate cash to a qualified 501(c)(3) charity, you may deduct the amount (up to 60% of your adjusted gross income) if you itemize deductions.

When cash donations might make sense:

  • You don’t own appreciated assets
  • You don’t want to part with any of your investments
  • You’ve already sold appreciated stock (and paid the capital gains)

Cash remains a reliable option, but it’s not always the most efficient.

The Smart Strategy: Donating Appreciated Stock

If you’ve owned publicly traded stock for over a year and it has increased in value, donating those shares directly to charity can provide two key tax benefits:

  1. You avoid paying capital gains tax on the appreciated value.
  2. You can deduct the full fair market value of the stock on the date of donation.

Let’s say you bought stock for $2,000 and it’s now worth $10,000. If you sell it, you’ll owe capital gains tax on the $8,000 gain. But if you donate the shares directly, the charity receives the full $10,000, and you get the full deduction, with no tax owed on the gain.

When stock donations might make sense:

  • You have highly appreciated investments
  • You’re planning a larger gift
  • You’re looking for end-of-year tax planning strategies

Maximizing Impact Through a Donor-Advised Fund (DAF)

If you’re not sure which charities you want to support right away, a Donor-Advised Fund allows you to donate stock now (and take the tax deduction this year), then decide later where the funds should go. DAFs are a popular and flexible tool for strategic givers.

Bottom Line: Giving with Purpose and Planning

Charitable giving should reflect your values—but with a smart strategy, it can also strengthen your overall financial plan. Whether you donate cash, appreciated stock, or use a Donor-Advised Fund, understanding the tax and impact differences helps you make the most of your generosity.

Want to explore the best way to structure your charitable giving this year?

Our team at James Investment is here to guide you through options that align with your financial goals and philanthropic values.

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