HCR Wealth Advisors – Charitable Donations

Planning out charitable contributions is important, not only for the organizations you want to support, but also for your own financial planning. And the end of the year is always a popular time to think about donations, and how to make them.

HCR Wealth Advisors can help you decide between two very common types of donations – stocks and cash. While donation preferences can affect this decision (some organizations may prefer one or the other), when the choice is yours there are many reasons to consider donating stocks. Important points to consider include:

Stocks are tax deductible: Like cash donations, stocks can also be deducted when you file your taxes. Note that appreciated stock donations are limited to 30% of their adjusted gross income.

Stock donations allow you to adjust your portfolio: Federal capital gains taxes, which can be as high as 20%, may come at an inopportune time for you this year, and states may also have capital gains taxes to consider. Donating stocks that have seen high appreciation rates this year is one way to reduce this tax liability – although it’s important to complete this before the end of the year. HCR Wealth Advisors can provide advice on which stocks are good options for this tax reduction.


Cash can be used to balance out a portfolio: If both cash and stocks are donation options for you, consider donating stock and then investing an equal amount of cash back into your portfolio. You can make several different choices with this method. For example, you could balance your portfolio more toward investments that you believe are a better long-term option. Or, you could donate stock and then repurchase more shares of that stock at a higher price to keep your portfolio the same but reduce your gains tax for the year.

Selling stock adds extra versatility to this donation option: You can also choose to sell stock directly and use the cash received as a donation to charity. This is a useful option if you don’t want to use any current sources of cash. Depending on your financial situation, you may also be able to avoid capital gains tax and donate even more to charity as a result.

This article is provided for informational purposes only and should not be interpreted as investment advice.