Maximize your giving with stock donations

By Rupa Chandra Gupta, Ed Fund Board Secretary

A true “win-win” is rarely possible, but I’ve learned that donating stock to the Oakland Public Education Fund is a “win-win” situation. Donating stock has a double tax benefit for you as a donor as well as an extra benefit for the Ed Fund.

When you donate stock to a charitable organization, you avoid paying capital gains tax—and you increase your capacity to make a larger contribution. That’s a win! In turn, the organization receives the full value of the stock on the day of transfer with no taxation. Another win!

With my stock donations, I am proud to support the Ed Fund’s work providing resources, volunteers, and funding to support public schools, students, and families in Oakland. And with the double benefit, I feel like my donation is a win-win-win!

Donating stock can still be a great option for those seeking to rebalance their portfolios or diversify from company/employer stock. It’s easy, accessible, and not limited to only wealthy individuals—anyone with investments in the public markets can donate stock. Transactions often only take one to two business days, so there is still plenty of time to donate stock before the end of the year.

Click here for quick instructions for stock donations and/or giving traditionally to the Oakland Public Education Fund. Any amount helps and goes to directly support student needs. Thank you for your consideration, and for everything you do to support our community!

Benefits of donating stock

1) Allows you to donate more for the same “cost”!

1. • You pay no capital gains tax
   • You receive the charitable deduction for the full amount donated
   • The nonprofit receives the full amount donated, with no capital gains/tax implications

Example: 

• Donating cash: You have $1,000 in shares that appreciated to $2,000. If you sell the shares, you pay tax on the gain, so you’re likely left with $1,600-$1,800 depending on whether it’s short-term vs long-term capital gains and your tax bracket (let’s assume $1,700 for now). You then donate those funds to a nonprofit of your choice and deduct your donation from your taxes. If you’re in a 30% tax bracket, your tax benefit on this donation will be $510. But you already paid $300 in capital gains tax, so your net tax benefit is only $210. The result is:
  • Nonprofit receives $1,700
  • Your net tax benefit is $210
• Donating stock: You have the same $1,000 in shares that appreciated to $2,000. You donate the $2,000 worth of shares to a nonprofit directly. You pay no capital gains, and the nonprofit sells your shares to receive the total amount in cash – also with no tax hit. When you file your taxes, you’re able to deduct the entire $2,000. Assuming the same 30% tax bracket, your benefit on this donation is $600. Since you didn’t pay any capital gains tax, there is no offset to this value! The result is:
  • Nonprofit receives $2,000
  • Your net tax benefit is $600

Here are a few resources that go into this all in more detail:

• Investopedia: Can I Donate Stock to Charity?
• Charity Navigator: Donating Stock
• Forbes: How To Donate Stock To Charity In 2022 

 

2) Allows you to divest, diversify and rebalance without paying capital gains tax. For example, if you receive public stock as part of your compensation, you can donate that stock directly instead of selling and donating cash.

3) Uses invested funds, so there is no impact on your cash savings. It kinda feels “free” :).

Making a stock donation

To make a stock donation, you directly transfer stock or mutual fund shares from your account to another party’s account. With charitable giving, you need the account information for the nonprofit, which is often publicly available or easy to obtain with a quick email. You will need the DTC number of the nonprofit’s financial institution, the account number, and the official account name.

After the transfer is processed, you need to contact the nonprofit to let them know. They will confirm receipt, and provide the documentation for your charitable deduction. The deduction will reflect the full amount of the transfer, including any gains. The nonprofit will usually then transact on the stock to receive the cash amount. They pay no taxes on any historical gains.

Each brokerage firm has a specific process for submitting a stock transfer, and some are more onerous than others. Contact your brokerage firm for specific details.

Another option for making a direct stock transfer is to create a donor-advised fund (DAF). In general, DAFs require a bit more research and work to set up, and usually require a larger sum of money ($10K+). Also, there are often fees associated with setting it up. New startups, old-school players (Fidelity, Schwab, Vanguard, and others), and local community foundations create DAFs.

Stock Donations to the Oakland Ed Fund

DTC or electronic transfer is the fastest and most secure method for donating securities.

The Oakland Public Education Fund’s account is held at First Republic Securities Company LLC (FRSC). Here are broker instructions to deliver securities to our brokerage account at FRSC:

• DTC: 0443 (Clearing through Pershing LLC)
• Financial Institution: First Republic Securities Company LLC (FRSC)
• Account Number: 33L196533
• Account Name: The Oakland Public Education Fund
• Nonprofit Tax ID: 43-2014630
• Instructions: Please notify Executive Director Alexandria Medina at ali@oaklandedfund.org of your intention to donate securities before initiating the transfer to the Oakland Public Education Fund.
• Prior notification is critical to identifying your gift of securities, as donor information does NOT transmit through the DTC system. For details, follow these instructions from the Oakland Public Education Fund.

Rupa Chandra Gupta is co-founder and CEO of Sown To Grow, an impact-driven education technology company designed to improve student ownership and engagement in learning. She also supports Oakland Unified School District’s Roosevelt Middle School via leadership and school design coaching. Previously, she served in both district office and school roles in San Jose Unified School District, most recently leading school redesign implementation. Before working in schools, Rupa spent nearly 10 years working in strategy and nonprofit consulting at Bain & Company and The Bridgespan Group.

She earned her Bachelors in Chemistry and Business Administration from UC Berkeley, her MBA from Stanford University, and her Masters in Educational Leadership through The Broad Residency.

Rupa lives in Oakland, and can often be found enjoying the parks, restaurants, and libraries of our great city with her family. Her children proudly attend Oakland’s public schools.