5 benefits of donating stock to charity

‍

What if there was a way for your donors to make a bigger impact on your ministry without it costing them more out of pocket? It turns out there is. Here’s the best-kept secret in church giving: donating stocks.

This isn’t a complicated tax hack or something that only financial experts understand. Donating stock to charity is a straightforward and incredibly effective way for your members to give more generously while also reaping practical benefits like avoiding capital gains taxes, simplifying their financial planning, and rebalancing their investment portfolios.

Since most churches don’t talk about donating stocks, mutual funds, ETFs, bonds, and cryptocurrencies, it means they’re missing out on a huge opportunity. In this post, we're sharing the top five benefits for your church and your generous donors.

Quick disclaimer: Before we dive into all of the benefits, this article is for informational purposes only and is not intended to be tax or financial advice. Please consult your financial or tax professional for advice specific to your individual situation. 

The 5 big benefits of donating stock to charity

Donating public and private company stocks can be a smart way to bring in more donations to your church. Here are some of the top benefits for both your church and donors. 

1. Give larger donations

People who donate stocks to charity tend to give a lot more than other donors. While most cash or online donations tend to be smaller gifts around $200, stock donations tend to be 30 to 150 times larger.  

Donating appreciated stock is one of the easiest ways for donors to give more without spending more. By contributing stock directly, they avoid paying high taxes—up to 20%—that they’d owe if they sold it first. That means your church gets the full value of the stock, and donors save money in the process. 

For example, if someone bought $1,000 worth of stock that’s now worth $5,000, donating the stock instead of selling it avoids paying taxes on the $4,000 gain while still allowing the donor to deduct the full $5,000 as a charitable contribution. It’s a win-win.

However, you need to make sure your church is classified as a qualified organization, as defined by the IRS, to make their gift tax-deductible. Then, the donor will need to provide a list of itemized deductions using Schedule A (Form 1040), which are required to claim the tax benefits of charitable gifts and stock donations. 

While the paperwork might sound intimidating, the tax savings and the ability to make a bigger impact can be well worth it.

Note: If a church member receives any benefits in return for their donation—like a ticket to an event—they can only deduct the portion that exceeds the value of that benefit. 

2. Avoid capital gains taxes

As we’ve already alluded to earlier in this article, donating stock can be a strategic move for your savvy donors. That's because by giving stock instead of selling it, they can skip capital gains taxes on stocks sold, which can be up to 20% of the gains they’d otherwise owe. This makes it a cost-effective way to give while maximizing the impact of their gift.

For example, if a donor owns $10,000 worth of stock they originally purchased for $4,000, selling it would mean paying taxes on the $6,000 gain. Donating appreciated stock to charity avoids those taxes entirely. So, the full $10,000 goes to supporting your church's mission.

Here’s what donors need to know to make the most of this option:

• Hold the stock for at least one year. To deduct the full market value of the stock, donors need to have owned it for more than a year. If they’ve held it for a shorter period, they may need to pay short-term capital gains tax and can only deduct what they paid for it originally.
  
  
• Know your deduction limits: The IRS caps the deductible amount for stock donations at 30% of a donor’s adjusted gross income (AGI). If their gift exceeds that limit, they can roll the excess into future tax returns for up to five years.
  
  
• Valuing the gift fairly. The fair market value is based on the stock’s average trading price on the day it’s donated. For stock held less than a year, the deduction is limited to the original purchase price.
  
  
• Public vs. private stock. Publicly traded stocks, mutual funds, and ETFs are the easiest to donate and offer the most straightforward tax benefits. Privately held stock is also an option, but it requires extra steps and may not be accepted by all charities.
  
  
• Timing matters. To qualify for a deduction this year, donors need to complete their stock transfer before December 31.

Helping your congregation understand how stock donations work empowers them to give more effectively while keeping more of their resources. It’s generosity that goes further for your church and its mission. 

3. Reset the cost basis & lower future tax burden  

When someone donates stock, they essentially “reset” the cost basis on their investment. In plain terms, this means when they reinvest in a similar stock, their new tax baseline is the current market value. Down the road, this can reduce how much they’ll owe in capital gains taxes when they sell. It’s a win for your church now and for their wallet later.

This strategy works especially well in higher-income years or during big life changes. For example, if someone sold a property, cashed out part of a business, or is nearing retirement and receiving deferred compensation, donating stock can help offset the taxes from that extra taxable income. It’s about being generous while also being smart with their money.

Here’s what to keep in mind:

• Donating during a high-income year gives donors the biggest tax break since it offsets those larger tax bills.
• By resetting the cost basis, future tax liability on similar investments can be lower when they eventually sell.

4. Balance your investment portfolio

Over time, certain investments can grow faster than others, throwing off the balance of your portfolio. By donating appreciated stock, donors can trim down overperforming assets and realign their portfolios with their financial goals. All while making a meaningful contribution to your church.

It’s like getting an annual physical. Just like regular checkups help people stay healthy and catch potential issues early, a yearly financial health check is just as important. This gives donors a chance to optimize their investments, reduce risk, and ensure their portfolio aligns with their long-term goals.

Pro Tip for donors: If your stock has increased in value, donating it directly is the smarter choice because you don’t have to pay capital gains taxes. But if your stock has lost value, you might be better off selling it first to take the tax loss, then donating the cash proceeds. Either way, you’re helping your church while improving your financial standing.

Encouraging your congregation to think about their financial health—just like they would their physical health—makes donating stock a win-win. It supports your ministry while helping them stay on track for their future. 

5. Simplify the donation process with Subsplash Giving 

Making it easy for donors to support your mission is key, and that’s where Subsplash Giving shines. It’s designed to remove every possible barrier so your church can accept donations more easily. Whether through your app, on your website, watching a live stream, or even texting a donation, Subsplash makes it simple for people to act on their generosity in the moment.

With options like Apple Pay, Google Pay, instant ACH transfers, and now our stock and crypto donation tool in partnership with Engiven, donations can be completed in seconds. No fumbling with credit cards or waiting for checks to clear—just a fast, hassle-free way for donors to support your ministry wherever they are.

Subsplash helps you meet your donors where they’re already spending their time. See why giving has never been easier. [.blog-contact-cta]Book a no-obligation demo today! [.blog-contact-cta]

More resources you may find helpful

• How to write the perfect church thank-you letter for donations
• 15 year-end giving campaign ideas to increase donations
• 50 simple & effective church fundraising ideas to support your mission
• Have you heard of Tap-to-Give?
• ‍Just released! Unlock new fundraising potential with Campaigns & Pledging