The Copper Circle

This past Sunday, Sarah and I (and spouses) were fortunate enough to be part of The Copper Circle dinner at the Hylton Performing Arts Center in Manassas. We had some delicious food from Avalon Caterers and met some very nice and generous donors to The Center. Meridian Financial Partners sponsored the dinner portion of the evening, and we heard from both Dr. Ángel Cabrera (George Mason University President) and Dean Rick Davis about the exciting plans for the addition of a new wing.

We at Meridian certainly feel that it is important to support local causes and the arts whenever possible. However, giving outright cash gifts is just one option when it comes to donating to your favorite charity. One very good choice, with which we often help clients, is giving highly-appreciated stocks or mutual funds in lieu of cash. This strategy will not only help the not-for-profit recipient,* but it will also help the donor maximize the gift and save twice on taxes: once for the donation and a second time for avoidance of capital gains tax. It’s easier to explain with an example:

Let’s say you were fortunate enough to buy 100 shares of IBM stock at $100 per share in 2009 (for a total of $10,000). Then last week, you noticed your alma mater was trying to raise money for its endowment fund for scholarships. Being the good alumnus that you are, you wanted to help by donating $15,000. Rather than use money in checking or savings, you decide you want to gift your IBM stock that is now trading at $150 per share ($150 x 100 shares = $15,000).

So, you get a $15,000 tax deduction for your gift, and you avoid the capital gains tax that you would have realized on the $5000 gain. The rate can be as high as 23.8% for some taxpayers, so that amounts to almost $1,200 in tax savings. The not-for-profit is able to then sell the stock for $15,000 and avoid paying any taxes due to its tax-exempt status. Most importantly, your alma mater will be ecstatic!


Almost all institutions have an account into which you can transfer stocks/mutual funds/bonds directly from your investment account. Further, if you are part of a not-for-profit that doesn’t offer this option for donations, it may well be worth looking into. So next time you are considering a gift to a charity, think about giving stocks or mutual funds instead of cash. Small side note: if you have a stock that is trading at a loss, it would be better for you to sell the stock and gift the proceeds. In this way, you can use the loss for your own benefit when filing your tax return.

*make sure that the non-profit is a qualified tax-exempt organization to be sure you get a full deduction.

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