Skip to main content

Maximize The Benefits of Your Charitable Contributions | By Eddie Waren

02/01/2007 01:36PM, Published by Anonymous, Categories:

We are all familiar with the need for charitable giving. Often times, not-for-profit organizations host an annual telethon, churches raise money for a member in need, and shelters look to volunteers for support. The spirit of goodwill is obviously the most important factor in these situations, but it is also important to understand the financial implications of your charitable gifts. By understanding those, you may uncover added benefits for you as the donor as well as for the charities you choose.

To help you get started, let’s take a look at the tax implications of charitable donations. In most cases, federal law lets you deduct the value of charitable contributions made during your lifetime if you itemize deductions. Therefore, your actual cost of giving equals the value of the property donated minus the tax savings. Keep in mind, however, that the tax law also establishes certain limits regarding charitable gift deductions. The amount you can deduct in any one year depends on the type of charity to which you donate, the type of property contributed and the way the charity uses the gift. In addition, you must itemize your deductions on your tax return in order to be able to take a charitable contribution deduction at all.

If you do itemize, then in order for your contributions to be deductible, the charity must be one of the qualified organizations, which are listed in IRS Publication 78. The law also distinguishes between public charities – which include churches, schools and other organizations that receive primary support from the public or the government – and private charitable entities, like a foundation, which are supported by a single individual or family. Gifts to public charities are given more favorable tax treatment than gifts to private foundations.

The type of property that you give is also considered in the amount of the tax deduction allowed. For example, if you give a cash gift to your local school, your annual deduction limitation will generally be higher than if you give a gift of appreciated property. Appreciated property can include items like securities or land that may have increased in value. Contributions to public charities of cash and property that are not long-term capital gain investments are deductible up to 50 percent of the donor’s adjusted gross income while appreciated property contributions have a 30 percent limitation.

While appreciated property has a lower annual deduction limitation, many choose to use investments to enhance the benefits of charitable giving. This is one way to fulfill your obligations at the lowest after-tax cost by donating appreciated securities you have held for more than one year instead of cash. By donating stock, for example, you can obtain a deduction for the stock’s current market value and avoid paying taxes on the capital gain you would have realized if you had sold the stock and donated the proceeds.

Here’s how it works: Suppose you are married, file a joint tax return and are in the 35 percent tax bracket. You own a number of shares of XYZ stock, now worth about $40 per share, for which you paid $20 per share more than one year ago. You have pledged a $4,000 contribution to your church this year and are considering alternative ways to fund the contribution. If you donated your stock directly, you would need to donate 100 shares (100 x $40 = $4,000). If you sold your shares, however, you would have to pay capital gains tax on your gain. Although you could raise $4,000 by selling 100 shares, you would owe $300 in capital gains taxes ($20 gain per share x 100 shares x 15%); therefore, you would fall short. With this approach, you would need to sell 109 shares to raise $4,000. By contributing shares rather than selling them and contributing the proceeds, you reduce the “cost” of your contribution and give up fewer shares.

While most people do not give to a charity for their own financial benefit, it is very important to understand these rules of taxation. You may be able to avoid any unexpected tax consequences and, more importantly, be able to preserve the spirit of goodwill and make the most of your charitable contributions.

A.G. Edwards generally acts as a broker-dealer, but may act as an investment advisor on designated accounts, and the firm’s obligations will vary with the role it plays. When working with clients the firm generally acts as a broker-dealer unless specifically indicated in writing. To better understand the differences between brokerage and advisory services, please consult “Important Information About Your Relationship With A.G. Edwards” on

This article was provided by Eddie Waren, manager of A.G. Edwards & Sons, Inc., Member SIPC. He is the brother of CityView’s publisher, Marshal Waren.

latest news and events

  • Tai Chi for Health


    Practice this flowing eastern exercise with instructor Rich Martin while overlooking the Garden. ...

  • Breathe Easy: Sinus Seminar

    05:30PM — 07:00PM

    Dr. Edward Dickerson, Double Board Certified Facial Plastic & Reconstructive surgeon, will ...

  • Come spend an evening creating a gorgeous Fowl Feather wreath perfect for the Fall season! Gather...

  • Yoga and Wine

    07:15PM — 08:15PM

    back to school can be stressful and we know you will need a little break to re-energize! sip, ...

  • Murchison Road Farmers Market

    10:00AM — 02:00PM

    Fresh vegetables, fruit, honey, and herbs are sold at this weekly market, located across from the...

  • Beth Moore Simulcast

    09:00AM — 04:00PM

    <Fayetteville, NC>– <September 23, 2017>– LifeWay Christian Resources and Living Proof ministries...

  • Everybody's favorite trip around the world...for free! Parade of Nations, live performances, auth...

  • Pop Up Flower Shot

    11:00AM — 02:00PM

    The owners of Gathered will be in to help you build your own bouquets or pick from thoughtfully p...

  • Hay Bale Festival

    06:00PM — 10:00PM

    Our Hay Bale Festival is not to be missed! Enjoy hay rides and our special Hay Bale Obstacle/ Cha...

  • Kensie Royale

    08:00PM — 12:00AM

    The purpose of this event is to raise funds to support stillbirth research, promote education a...

It looks like we don't have any events for this date. You can always add an event.

CityView Facebook
CityView Family Facebook