Gifts of Stock to Providence Health Foundation
The Added Value of Giving Securities
The gift of appreciated stock is an especially attractive option for donors. Why? Because with a gift of stock, if held more than one year, a donor saves taxes two ways. First, the donor can deduct the full fair market value of the stock, achieving a savings on his or her income tax. Second, the donor saves capital gains tax on the appreciated portion of the gift.
Example: A donor owns stock currently worth $10,000 that she has owned for five years. She paid $2,000 for the shares, and thus has an appreciation of $8,000. If she sold the stock, she would pay 20% capital gains tax, or $1,600, on the $8,000 gain. Her net proceeds would be $8,400, which if given to charity would give her a tax deduction of $2,352, assuming a 28% tax bracket.
However, if she gave the $10,000 in stock directly to charity, she could take her tax deduction on the full $10,000. Her income tax savings would increase 75% to $2,800, and the charity would receive $10,000 rather than only $8,400, a 20% increase in the size of the gift.
This type of gift is especially attractive to those who have made pledges, especially now when many stock holdings have increased in value dramatically. Paying a $10,000 pledge with cash on hand still reaps an income tax deduction of at least $2,800. But paying with the appreciated stock saves an additional $1,600 which would have gone to the Federal Government as a capital gains tax payment. Thus, paying a pledge obligation with stock in effect reduces the cost of the $10,000 gift to $5,600.
Transfers of Stock
The easiest way to give stock is to transfer it electronically from donor's account into Providence Health Foundation's account at:
Merrill Lynch Pierce Fenner & Smith, 1850 K Street, N.W. 7th Floor, Washington , D.C. 20006
Account Representative: William Steinbuch (202) 659-7556
PHF Account Number: #749-04D57
PHF Tax Exempt IRS number: 52-1275583
DTC # for electronic transfer: 5198
If the donor has a stock certificate, the donor can deliver or mail it with a signed cover letter to Providence Health Foundation at 1150 Varnum Street, N.E. Washington , D.C. 20017 Attn: Robert A. Hutson. Signed stock certificates should not be sent by mail since they are negotiable once signed. In a separate envelope, the donor must send a signed Stock Power to the PHF address above. The Foundation can assist in executing a Stock Power.
Fair Market Value and Gift Date
The fair market value of the gift is the average of the stock's highest and lowest price on the effective date of transfer.
For tax purposes, the effective date of transfer for gifts of stock is as follows:
- For a stock certificate that is mailed, it is the date postmarked on the envelope.
- For a stock certificate that is transferred in person, it is the date the certificate is signed.
- For a stock that is electronically transferred to PHF, it is the date it is transferred into the PHF account.
Donors are urged to consult their tax advisor to determine their tax deduction for any specific gift.
