how to donate stock to a nonprofit

Donating Stock to a Nonprofit

This guide explains how to donate stock to a nonprofit in clear, practical terms. If you're wondering how to donate stock to a nonprofit to maximize charitable impact while gaining tax benefits, this article walks you through the types of securities you can give, legal and tax considerations, transfer methods, a donor checklist, nonprofit processing, common pitfalls, example calculations, and trusted resources. By the end you'll know the operational steps and documentation needed so your gift counts and is tax‑advantaged.

As of December 31, 2025, according to Fidelity Charitable and other nonprofit giving resources, donating appreciated securities remains a commonly used and tax‑efficient way to support charities.

What "donating stock to a nonprofit" means

In U.S. equities and financial markets, "how to donate stock to a nonprofit" refers to the process of transferring ownership of publicly traded securities (stocks, ETFs, mutual funds, bonds) or other securities to a tax‑exempt nonprofit organization so the nonprofit can hold or sell the securities and the donor may receive charitable tax benefits.

Donors and nonprofits use this method because it often lets the charity receive the full market value while the donor avoids paying capital gains tax on appreciation and may claim a charitable deduction when eligible. While this guide focuses on U.S. tax rules and common practice, many operational details (broker transfer instructions, processing partners) vary by charity and brokerage.

Benefits of Donating Stock

Donating stock to a nonprofit is popular for several reasons:

• Capital gains avoidance: When you donate long‑term appreciated securities directly to a qualified nonprofit, you generally avoid paying capital gains tax on the appreciation — the charity can sell the shares tax‑free.
• Gift deductibility at fair market value: If you itemize deductions and the security was held for more than one year, you can typically deduct the fair market value (FMV) of the donated shares on the date the charity receives them, subject to AGI limits.
• Greater charitable impact: By transferring appreciated securities rather than selling them (and then donating cash), more value reaches the nonprofit because capital gains taxes that would otherwise apply are avoided.
• Administrative ease for charities: Many nonprofits can quickly liquidate publicly traded donations to fund programs without delay.

Nonprofits benefit because they generally do not pay capital gains tax when they sell marketable securities — the full proceeds after liquidation can support mission activities. Donors who plan giving strategically often find donating appreciated shares increases philanthropic leverage.

Types of Securities That Can Be Donated

Donatable instruments commonly include:

• Publicly traded stocks: Shares listed on major U.S. exchanges are straightforward to transfer via DTC (broker‑to‑broker) delivery.
• ETFs and mutual funds: Most mutual fund shares and ETFs can be gifted directly; mutual funds held outside a brokerage may require special procedures.
• Bonds: Marketable corporate and government bonds are often accepted.

Less common or more complex gifts:

• Privately held shares and restricted stock: These typically require additional legal review, valuation (appraisal), and substantiation. Nonprofits may accept private equity or closely held stock under specific rules but usually after confirming liquidity and legal transferability.
• Physical stock certificates: Donating paper certificates is possible but requires endorsement, transfer forms, and may be slower.
• Ineligible or restricted assets: Some charities and brokers do not accept certain foreign securities, tiny‑cap or restricted shares, or assets subject to lockups.

Before initiating a transfer, confirm with the receiving nonprofit what securities they accept and the exact transfer instructions for the security type.

Legal and Tax Considerations

This section provides high‑level guidance. Tax law changes; consult a qualified tax advisor or attorney for personal guidance.

Holding Period and Valuation

• Long‑term holding rule: To claim a deduction for the fair market value rather than cost basis, the donated security generally must have been held for more than one year (long‑term capital asset).
• Valuation date: The FMV is typically the closing price of the donated security on the date the charity receives the shares in its account, not necessarily the date you initiated the transfer. For illiquid securities, appraisal rules apply.

Tax Deduction Limits and AGI Rules

• Deduction limits: Deductions for gifts of appreciated publicly traded securities are generally limited to a percentage of adjusted gross income (AGI) — commonly 30% of AGI for gifts of appreciated securities to public charities (rules and percentages can vary). Excess amounts may be carried forward for up to five tax years.
• Nonpublic securities: Gifts of closely held stock or other nonpublic property typically have lower AGI deduction limits (often 20% of AGI) and may require an appraisal.

IRS Forms and Substantiation

• Written acknowledgement: For any charitable contribution you must obtain a contemporaneous written acknowledgement from the charity for tax substantiation when claiming a deduction.
• Form 8283: Typically required for noncash gifts over $500. For nonpublicly traded securities or gifts valued over $5,000, a qualified appraisal and additional Form 8283 sections may be required.
• Charity receipts: Ensure the charity provides a receipt that includes the date the charity received the property, a description of the donated securities, and whether any goods or services were provided in return.

Capital Gains, Net Investment Income Tax and Wash‑Sale Considerations

• Capital gains avoidance: Donating appreciated securities removes the unrealized gain from your taxable portfolio; you generally do not recognize capital gains tax on donated appreciated securities.
• Net Investment Income Tax (NIIT): Donating appreciated securities may also affect calculations for the 3.8% NIIT (applicable to higher income filers) — the specifics are based on income composition; consult a tax professional.
• Wash‑sale rules: Wash‑sale rules apply to losses from sales and repurchases of substantially identical securities and generally do not apply to charitable donations. However, be careful with complex trading around the donation date; consult your tax advisor if you want to sell and rebuy similar positions.

Methods for Donating Stock

There are several common ways to transfer securities to a nonprofit. Each has pros and cons depending on timing, donor convenience, and charity preferences.

Direct Broker Transfer (DTC)

Direct transfer via the broker is the most common and direct route for publicly traded securities.

Steps and notes:

1. Confirm acceptance: Contact the nonprofit and confirm they accept securities and request their brokerage transfer instructions (broker name, DTC number, account number, and any required donor ID or reference number).
2. Provide donor info: Many charities require a donor form or donor identification number so gifts are properly attributed; without this, transfers can be unattributed.
3. Instruct your broker: Use your brokerage's transfer or charitable gifting process to initiate an in‑kind transfer to the charity's brokerage account. This often requires the charity’s DTC & account number and may require a signed transfer form.
4. Confirmation and valuation: After the charity receives the shares, they should send an acknowledgment with the date of receipt and number of shares. The FMV used for deduction is typically the market close price on the date of receipt.

Timing: DTC transfers typically settle within 1–3 business days for most publicly traded securities, but processing delays can occur.

Common pitfalls: Missing donor ID, incorrect DTC/account numbers, and year‑end timing (donations intended for a particular tax year should be initiated early to ensure the charity receives shares by Dec. 31).

Online Stock‑Gifting Platforms / Processors

Third‑party services (examples of the category) help donors and nonprofits by providing a form to capture donor info, initiating transfers, and reconciling donations when transfers lack donor metadata.

How they work:

• Donor signs up with the processor and enters the security to donate; the platform provides transfer instructions for the donor's broker.
• The processor coordinates delivery and notifies the nonprofit, often facilitating faster reconciliation and donor receipts.
• Fees: Some platforms charge facilitation fees or request the nonprofit cover costs; compare fees versus direct transfer.

Benefits: Simplifies attribution, reduces reconciliation issues, and provides tracking for donors and charities.

Donor‑Advised Funds and Charitable Accounts

Donating securities to a donor‑advised fund (DAF) is a popular route when donors want immediate tax benefits and later flexibility in grantmaking.

Key points:

• Immediate deduction: Donors receive a tax deduction when the securities are contributed to the DAF.
• Grant flexibility: Donors advise grants to charities over time while the DAF holds or invests the contributed assets.
• Platforms: Large charitable sponsors often provide a streamlined process for transferring securities into a DAF and later issuing grants.

Through Financial Advisors or Custodians

Financial advisors or custodial institutions can initiate transfers on your behalf, obtain required transfer instructions, and coordinate documentation. This option is useful when your assets are held in accounts that require advisor authorization or when gifts involve complex holdings.

Step‑by‑Step Guide for Donors (Practical Checklist)

Below is a practical checklist you can follow when planning how to donate stock to a nonprofit.

1. Confirm the charity accepts securities: Call or check the nonprofit’s gift instructions page to obtain their brokerage details and any donor form.
2. Identify the shares and lot: Choose which security and specific lot (if you have multiple lots), confirm acquisition date and cost basis, and verify holding period (to determine if FMV deduction applies).
3. Meet with your tax advisor: Review tax implications and deduction limits based on your situation.
4. Initiate transfer: Use your brokerage's online transfer form or call your broker to initiate the DTC transfer, or use a gifting platform per the nonprofit’s instructions.
5. Provide donor identification: If the charity requires a donor form or donor ID, submit it promptly to ensure proper attribution.
6. Follow up: Confirm with the nonprofit that the shares were received and request a written acknowledgement stating the date of receipt, number of shares, and FMV.
7. Document for taxes: Keep all transfer confirmations, charity acknowledgements, and cost basis records for tax filing, including Form 8283 if applicable.

Year‑end timing: Transfers intended for a specific tax year should be started well before December; allow for broker processing and nonprofit reconciliation. Start transfers at least 7–10 business days before year‑end as a practical rule, and earlier if possible.

How Nonprofits Receive and Process Stock Gifts

Understanding how charities handle stock gifts helps donors ensure attribution and timely receipts.

Having a Brokerage Account vs Using a Processor

• Own brokerage account: Many nonprofits maintain an institutional brokerage account to accept DTC transfers. They provide account/DTC numbers and reconciliation instructions to donors.
• Using a processor: Smaller charities often partner with a stock donation processor that accepts transfers to a centralized account, reconciles donor information, liquidates positions as directed, and remits net proceeds to the nonprofit.

Advantages of processors: They reduce administrative burden, solve attribution problems, and may speed the conversion of gifts to cash.

Reconciliation, Liquidation, and Acknowledgement

• Attribution issues: Securities moving through DTC systems sometimes arrive without donor metadata. Nonprofits and processors use donor forms, transfer‑in forms, or broker‑provided donor IDs to reconcile gifts. Donors should complete the charity’s donor form to avoid unattributed transfers.
• Liquidation timing: Charities typically liquidate marketable securities soon after receipt to reduce market risk and convert gifts to cash for programs. Liquidation timing depends on investment policy and market conditions.
• Acknowledgement: After receipt (and sometimes after liquidation), charities should issue a written acknowledgement that includes the date received, description of securities, number of shares, and a statement that no goods or services were provided if none were.

Investment Policy and Hold vs Sell Decision

Nonprofits must decide whether to hold donated securities or sell immediately based on liquidity needs, concentration risk, and investment policy. Holding can be appropriate if the organization’s investment policy allows and if the donation aligns with long‑term portfolio strategy.

Special Cases and Additional Considerations

Donating Depreciated Securities

• If the security has declined in value, it may be preferable to sell the security, realize the capital loss, and donate the cash proceeds to a charity — this allows you to claim a capital loss on your taxes and still make the charitable gift.
• If you donate a depreciated asset, your deduction for FMV may be limited; consult your tax advisor for the most tax‑efficient approach.

Gifts of Restricted Stock, Stock Certificates, and Tangible Share Certificates

• Restricted stock often carries transfer restrictions requiring issuer approval. Nonprofits may accept restricted shares only after confirming transferability.
• Paper certificates must be endorsed and accompanied by transfer documents. Consider converting certificates to electronic form via your broker to expedite transfer.

International Donors and Non‑U.S. Securities

Cross‑border donations and donations of non‑U.S. securities involve additional tax and legal issues. U.S. tax benefits generally depend on donor residency and whether the recipient charity qualifies under U.S. tax rules. International donors should consult cross‑border tax counsel.

Using Stock to Fund Planned Giving Vehicles

Securities can fund charitable remainder trusts, charitable gift annuities, or bequests. These planned giving vehicles have unique tax and income characteristics and often benefit from contributed appreciated securities.

Common Pitfalls and How to Avoid Them

• Missing donor identification: Always complete the charity’s donor form and include any donor ID to ensure proper attribution.
• Year‑end timing issues: Start DTC transfers well before year‑end to ensure receipt in the desired tax year.
• Inadequate documentation: Keep all confirmations, written acknowledgements, and any appraisals for nonpublic gifts.
• Donating ineligible securities: Verify the charity and broker accept your specific security (some foreign or restricted securities may not be accepted).
• Failing to consult professionals: Complex gifts (private equity, restricted stock, substantial concentrations) should be reviewed by tax and legal advisors.

Example Calculations and Illustrations

Example: Donating appreciated publicly traded stock vs selling then donating cash.

• Scenario: You purchased 100 shares of XYZ Corp five years ago at $20 per share (cost basis $2,000). Today XYZ trades at $100 per share (FMV $10,000). Your long‑term gain would be $8,000.

Option A — Sell then donate cash:

• Sell 100 shares at $100 = $10,000. Assume long‑term capital gains tax at 15% = $1,200 (simplified). After tax you have $8,800 to donate.
• Tax deduction on cash: If you donate the cash, you deduct $10,000 (but tax benefit depends on AGI limits and tax bracket) — however net cost depends on your marginal rate.

Option B — Donate shares directly:

• Donate 100 shares directly to the charity. The charity sells the shares tax‑free and receives $10,000. You avoid recognizing the $8,000 capital gain, and you generally deduct the $10,000 FMV (subject to AGI limits).

Net charitable impact and tax comparison vary with your tax bracket, AGI limits, state taxes, and whether you itemize. This example illustrates how direct donation can increase the amount received by the charity and reduce tax drag for the donor.

Best Practices & Donor Checklist (One‑page summary)

• Confirm the charity accepts securities and obtain their transfer instructions.
• Choose the lot(s) to donate and confirm holding period (>1 year for FMV deduction).
• Consult a tax advisor to estimate the tax impact and AGI limits.
• Complete the charity’s donor form to ensure attribution and provide donor contact info.
• Initiate the DTC transfer or use a recognized platform/processor.
• Track confirmations and request a written acknowledgement from the charity with the receipt date and FMV.
• Keep your records (broker confirmations, charity acknowledgement, Form 8283 if required) for tax filing.

Resources and Platforms

Representative organizations and platforms that provide guidance and services for stock donations include donor‑facing services and nonprofit processors. Prominent categories and examples of the kind of resource you may consult:

• DonateStock and StockDonator: Online platforms that streamline donor identification, transfer initiation, and reconciliation for nonprofits and donors.
• Donor‑advised fund sponsors (example: Fidelity Charitable): DAF sponsors accept securities, provide immediate tax receipts, and allow donors to recommend grants over time.
• Charity guidance pages: Many large nonprofits (for example, Feeding America, WWF, CDC Foundation) provide sample transfer instructions and forms for donors.
• Charity Navigator and similar charity guidance services: Provide best practices and checklists for donors considering noncash donations.

Note: This article references the types of resources above as examples of typical service providers and informational sources. Always consult the specific charity’s official gift instructions or development office for exact transfer details.

Regulatory and Compliance Notes

• Acknowledgement rules: Charities are legally required to provide written acknowledgements for noncash gifts as required by IRS substantiation rules.
• Broker compliance: Brokers and custodians perform anti‑money‑laundering (AML) and know‑your‑customer (KYC) checks that can delay transfers. Expect identity verification steps for large or unusual gifts.
• Institutional policies: Nonprofits have policies for accepting, holding, or liquidating noncash gifts; they may decline certain assets for legal or liquidity reasons.

Frequently Asked Questions (FAQ)

Q: Can I donate part of my position? A: Yes. You can donate a portion of your holdings (partial lot) by specifying the number of shares to transfer. Ensure your broker and the charity receive correct lot and share count.

Q: What if the stock falls after I initiate the transfer? A: Your tax deduction depends on the FMV when the charity receives the shares. If the price falls before receipt, your deduction may be lower. Initiate transfers early and confirm the charity’s receipt date.

Q: When is the donation considered made for tax purposes? A: For securities transferred by DTC, the donation date is generally the date the charity receives the shares in its account. For mailing physical certificates, the tax date can be the date of delivery depending on rules and substantiation; consult a tax pro.

Q: Will the charity pay tax when they sell the shares? A: Generally, qualifying 501(c)(3) public charities do not pay capital gains tax when they sell donated publicly traded securities. That is one reason donating appreciated securities is efficient.

Q: Can I donate shares held in an IRA? A: Qualified charitable distributions (QCDs) allow IRA owners 70½/72+ to transfer up to a limit directly from an IRA to charity as a QCD, but transferring securities in kind from an IRA has different rules; consult your retirement plan custodian and tax advisor.

See Also

• Donor‑advised funds
• Charitable remainder trusts
• IRS Form 8283
• Capital gains tax and charitable giving strategies

References and Further Reading

Sources used for this guide include nonprofit gift instruction pages and charitable giving resources. For the most up‑to‑date official guidance, consult these kinds of sources and the charity’s own instructions:

• FreeWill: Donating stock guides and step‑by‑step instructions.
• Fidelity Charitable: Guidance on donating securities to donor‑advised funds and processing times.
• DonateStock and StockDonator: Platforms that streamline donations and reconciliation for donors and nonprofits.
• Feeding America, WWF, CDC Foundation: Example charity gift instructions used as operational references.
• Charity Navigator: General guidance on noncash contributions and substantiation.
• Carnegie Invest / industry blogs: Practical tips and simplified explanations of stock donations.

As of December 31, 2025, according to Fidelity Charitable and nonprofit sector references, donated securities remain a leading noncash philanthropic vehicle for U.S. donors seeking tax efficiency and greater impact.

More Practical Notes and Bitget Mention

If your philanthropic planning includes digital or tokenized assets, consider using secure custodial wallets and services. When mentioning Web3 wallets, Bitget Wallet is a recommended option in this guide for securely managing blockchain‑native assets and bridging to charitable crypto donation workflows where charities accept crypto donations. For securities (stocks, ETFs, mutual funds) the process described above (DTC, donor‑advised funds, or processor) is typical. Always confirm the charity’s accepted asset list and transfer procedures.

Final Checklist: Before You Donate

• Confirm charity acceptance and get written transfer instructions.
• Determine holding period and lot selection for maximum tax efficiency.
• Consult a tax advisor about AGI limits and Form 8283 requirements.
• Initiate transfer with your broker or a gifting platform and submit donor identification.
• Verify charity receipt and obtain a contemporaneous written acknowledgement.
• Retain records for tax reporting and future reference.

Further exploration: For donors who want to integrate crypto donations or manage diverse asset classes, explore Bitget Wallet features that emphasize security and custody for blockchain assets while using the traditional DTC process described here for marketable securities. Want help starting? Contact a tax advisor and your charity’s development office to get the specific transfer details.

Thank you for reading — if you plan to donate appreciated securities, taking these steps will help ensure your gift is credited properly, maximizes the charitable impact, and is documented for tax purposes.