Beyond the Checkbook: Why Donating Stock is the Smarter Way to Give
- Karlen Nurijanyan
- Aug 20
- 5 min read
Before we begin this narrative, let’s take a hypothetical example. When Sarah G., a longtime supporter of education-focused nonprofits, reviewed her portfolio in late 2023, she realized she was sitting on $25,000 worth of tech stocks that had appreciated significantly since she first purchased them in 2012. Rather than sell them and make a traditional cash donation to her favorite nonprofit, she spoke with her financial advisor. Within a few days, Sarah transferred the shares directly to the organization, avoided thousands in capital gains taxes, received a full deduction for the fair market value of the stock, and most importantly, boosted the nonprofit’s impact far beyond what a check could have achieved.
Stock donations, while still underutilized by many individual donors, represent one of the most efficient and high-leverage ways to support charitable causes. Yet despite their financial benefits and straightforward process, many philanthropically inclined individuals continue to rely on cash contributions, often missing the opportunity to maximize their giving power.
A More Strategic Approach to Giving
The traditional model of charitable giving, which is writing a check or donating online, has its merits. But when it comes to maximizing both tax efficiency and impact, donating appreciated stock often outperforms cash.
At the core of this strategy is a powerful financial principle: if you donate long-term appreciated securities directly to a nonprofit, you avoid paying capital gains tax on the increase in value, and you also receive a charitable deduction for the full market value of the gift. This results in a double benefit, allowing more of your assets to go directly toward the cause rather than to the IRS.
The Double Tax Benefit, Explained
Consider a hypothetical example:
You purchased 100 shares of a stock in 2015 at $10 per share.
Today, those shares are worth $100 each, for a total value of $10,000.
If you sell the shares first and then donate the proceeds, you would pay capital gains tax on the $9,000 gain.
Assuming a 20% capital gains tax rate, you’d owe $1,800 in taxes, reducing your donation to $8,200.
Now compare that to donating the stock directly:
You transfer the $10,000 in shares directly to a qualified nonprofit.
You avoid paying any capital gains tax.
You can deduct the full $10,000 from your taxable income if you itemize.
This tax-efficient method allows you to give more at no additional cost to you. For high-income donors or those with significantly appreciated assets, the difference can be substantial.
Making It Happen: How to Donate Stock
Despite the benefits, many donors hesitate to give stocks because the process seems opaque. In reality, donating stock can be surprisingly straightforward with proper guidance.
Here’s how to get started:
Identify the Right Stock
Choose long-term appreciated securities. These are stocks you’ve held for more than one year and that have increased in value.
Check the Charity’s Capabilities
Confirm that the nonprofit accepts stock donations. Most established organizations do. Some use third-party platforms to facilitate the process.
Coordinate With Your Broker
Contact your brokerage firm and request a stock transfer to the nonprofit’s brokerage account. This typically involves filling out a simple form.
Notify the Charity
Alert the organization about your donation. Brokerage transfers often arrive without donor information attached, so direct communication ensures proper acknowledgment and tax documentation.
Keep Records for Tax Purposes
You’ll receive a receipt from the charity for the fair market value of the donation on the date of transfer. Consult your tax advisor to ensure proper reporting.
By following these steps, you can unlock a powerful form of giving that enhances your financial planning while creating meaningful change.
Amplifying Impact Through Strategic Giving
The real value of donating stock isn’t just in the numbers. It’s in the outcomes those numbers enable. Nonprofits that receive stock donations benefit from greater flexibility and higher-value contributions, allowing them to scale programs and expand services.
This principle of maximizing every dollar is especially important for organizations addressing systemic challenges like college food insecurity and college hunger, issues that affect students' ability to succeed in higher education.
Rising tuition, inflation, and housing costs have created a perfect storm of unmet basic needs, especially among first-generation and low-income students. The impact is seen in everything from academic performance to dropout rates, all linked to the growing problem of food insecurity in college students.
Student LunchBox, a Los Angeles-based nonprofit, puts these enhanced contributions to work every day. By redistributing rescued food and essential supplies to economically disadvantaged college students, SLB tackles hunger on campus with strategic precision. Each stock donation helps them deliver more fresh produce, grocery items, and hygiene products directly to students, empowering them to stay enrolled and on track.
SLB's work addresses not just food insecurity on college campuses but also the broader crisis of food insecurity in higher education, where access to nutrition is increasingly tied to educational equity.
Expert Insights: What Advisors and Donors Are Saying
Financial professionals have long championed non-cash giving as a smart move for philanthropists.
“Donating appreciated assets like stocks is one of the most underutilized ways to give effectively,” says Russell James, a professor at Texas Tech University who studies charitable financial behavior. “It allows donors to achieve a larger impact with the same out-of-pocket cost.”
According to a recent Fidelity Charitable study, donors who contribute non-cash assets tend to give 55% more annually than those who provide only cash.
Major institutions are embracing this approach. Organizations such as Student LunchBox now encourage stock donations as part of long-term fundraising strategies, recognizing that donor efficiency can translate into measurable, on-the-ground impact.
Why Most Donors Still Don’t Do It
Despite the advantages, fewer than 10% of donors report giving stocks or mutual funds. There are several reasons:
Lack of awareness of the benefits
Perceived complexity of the process
Uncertainty around how to begin
The solution lies in better education and streamlined access. Nonprofits like Student LunchBox are taking proactive steps to demystify stock giving by offering clear instructions, responsive support, and automated options to simplify the donor experience.
Rethinking Philanthropy in a Volatile Market
In times of economic uncertainty, donors may be cautious about liquidity and portfolio value. But appreciated assets, especially those held long term, still present unique opportunities to create lasting good.
Rather than selling high-performing stocks and writing checks with the after-tax proceeds, consider the strategic alternative. Stock donations are not only a smart financial decision. They are a way to give with precision, scale, and purpose.
The next time you review your year-end giving plans or consider how to support a cause that matters to you—whether addressing college student hunger or strengthening educational outcomes—ask a better question: What can I do to make my donation go further?
Chances are, the answer lies not in your wallet, but in your portfolio.
