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Why Now Is a Good Time to Make a Planned Gift with Appreciated Stock
Posted May 2023
After the past few years of uncertain and challenging economic times, many investors are exploring new ways to make charitable gifts that would also provide benefits for themselves. Inflation, stoked by years of stimulus spending, resulted in higher interest rates and falling stock prices. Lower stock prices may present a positive opportunity for anyone planning to make a gift. Here is why:
Many investors have been in the stock market for decades, not just the past year. Over a longer time horizon, their portfolios have performed well. For example, the S&P 500 is still up more than 160% since January 2000.
If you were considering writing a check for $10,000 to support a nonprofit organization in which you believe deeply, it may be a better idea instead to use that $10,000 to buy new stock at today’s lower prices and donate $10,000 worth of appreciated stock to establish your charitable gift.
Donating appreciated stock helps you in a few ways. It saves you from paying capital-gain tax on the stock you donate, and it provides an immediate tax deduction based on the value of your donation. It also allows you to use your $10,000 check to buy new stock at a new, likely higher, base value—which will reduce your capital gain in the future when you sell that stock.
A down market may seem like bad news, but, in truth, it could provide some good investment opportunities and lower your tax burden—saving you money until the market recovers again.
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