Giving Through Stock: A How-To Guide for Donors

Quick overview

Donating stock — sometimes called a gift of appreciated securities — means transferring shares of publicly traded companies directly to a qualified charitable organization instead of selling them and donating the cash proceeds. For many donors this approach can increase the after-tax value of the gift because you generally avoid capital gains tax on the appreciation and may claim a charitable income tax deduction for the fair market value of the shares on the donation date (for stock held more than one year) (IRS Publication 526).

This article explains how the transfer works, paperwork you’ll need, tax limits and recordkeeping, practical examples, and common pitfalls. I’ve used this strategy with clients for more than a decade to magnify giving while reducing tax friction—below are the steps I recommend and the documentation charities and brokers typically require.

How the tax rules work (simple explanation)

• Long-term appreciated stock (held > 1 year): You typically can deduct the fair market value (FMV) on the date of the gift and do not recognize capital gains (see IRS guidance on charitable contributions) (IRS Publication 526).
• Short-term stock (held ≤ 1 year): The deduction is generally limited to your cost basis (what you paid) rather than FMV.
• Deduction limits: Gifts of appreciated securities to public charities are subject to percentage limits of your adjusted gross income (AGI). Excess amounts may usually be carried forward for up to five years (IRS Publication 526).
• Substantiation: Noncash gifts require specific records. For publicly traded stock you’ll generally need brokerage transfer records and Form 8283 when noncash contributions exceed $500 (see Form 8283 instructions and IRS rules on noncash contributions).

Authoritative references: IRS — Charitable Contributions (Publication 526) and instructions for Form 8283: https://www.irs.gov/charities-non-profits/charitable-contributions and https://www.irs.gov/forms-pubs/about-form-8283

Step-by-step: How to donate stock (practical checklist)

1. Confirm the charity accepts gifts of stock. Not every small charity has brokerage accounts or the systems to receive securities. If they don’t, ask whether they accept donations via a donor-advised fund (DAF) or a brokerage gift service.
2. Verify tax-exempt status. Confirm the organization is a qualified 501(c)(3) public charity to support your income-tax deduction. Use the charity’s letter or the IRS Exempt Organizations Select Check tool.
3. Identify the shares to donate. Use shares you’ve held more than one year to maximize tax benefit. For concentrated positions, we’ll cover alternative strategies below.
4. Contact the charity or its broker. The charity typically provides a brokerage account number, DTC number (Depository Trust Company routing), or a form to initiate an electronic transfer. Many charities publish step-by-step instructions for specific brokers.
5. Instruct your broker to transfer the shares. Provide the charity’s broker details, number of shares or dollar value, and the intended gift date. Transfers are most efficient as in-kind electronic DTC transfers from your brokerage to the charity’s brokerage account.
6. Record the gift date and FMV. The FMV is the average of the high and low quoted selling prices on the date of the contribution (or the closing price, depending on the security and reporting method). Keep the transfer confirmation and the charity’s written acknowledgment.
7. File the proper tax forms. If noncash gifts exceed $500 in a tax year, complete Section A of Form 8283 and attach it to your return. If your donation of a single security is valued over $5,000 and is not publicly traded, different appraisal rules apply—publicly traded securities generally do not require a qualified appraisal (see Form 8283 guidance).

Sample instruction to your broker (example):

• Security: XYZ Corp (ticker: XYZ)
• Quantity: 100 shares
• Gift recipient: Helping Hands Foundation
• Receiving brokerage: [charity broker name]
• DTC number: [charity DTC] or account number: [charity account]
• Contact at charity: [name, email/phone]

Real-world example and numbers (illustrative)

You bought 200 shares of ABC Co. for $10,000 (basis) some years ago; the shares are now worth $40,000. If you sell before donating, you may owe tax on the $30,000 gain (capital gains tax). By donating the 200 shares directly to a qualified charity you:

• Avoid realizing the capital gain (no tax on the $30,000 appreciation)
• Can usually deduct the $40,000 FMV on the date of the gift if you itemize and meet deduction limits

Example calculation (simplified): If your long-term capital gains tax rate would have been 15% and you would have realized $30,000 of gains by sale, donating the shares can avoid approximately $4,500 of capital gains tax while delivering $40,000 to the charity (before considering AGI deduction limits and state tax impacts).

Note: These are illustrative numbers only. Your tax result depends on your tax bracket, state tax rules, and whether you itemize.

Special cases and common pitfalls

• Private or restricted stock: Gifts of private company stock, restricted shares, or shares subject to transfer restrictions are more complex. Many charities cannot accept private stock and, if they do, the gift often requires appraisal and additional legal steps. See our guide on donating complex assets for more (Donating Complex Assets: Real Estate, Private Stock, and Cryptocurrency).
• Employee awards, RSUs, or options: Many employee equity awards have tax and plan rules that make direct gifting complicated. Typically you must first vest and transfer the shares out of any plan rules or exercise options before gifting; consult a tax pro or plan administrator.
• Timing and price/date selection: The value for tax purposes is the FMV on the date of the gift. Electronic transfers may settle a day later; be sure the charity acknowledges the receipt date for substantiation.
• Itemizing requirement: To claim a charitable deduction you must itemize deductions on your federal tax return (unless other special rules apply). Since many taxpayers now take the standard deduction, donating appreciated securities may still make sense if other itemizable deductions exist.

How donation limits and carryovers work

Gifts of appreciated securities to public charities are subject to percentage limits of AGI; gifts that exceed those limits can usually be carried forward up to five years. Exact limits depend on the type of property and the recipient. For full details and current-year rules consult IRS Publication 526 and Form 8283 instructions.

Reference: IRS Publication 526 — Charitable Contributions (2025 update), and Form 8283 instructions: https://www.irs.gov/forms-pubs/about-form-8283

Practical tips from practice (what I tell clients)

• Use highly appreciated long-term shares for maximum tax efficiency. If you have both short- and long-term lots, direct long-term lots to the charity.
• Coordinate with the charity before initiating the transfer; many small organizations lack brokerage infrastructure and will direct you to a donor-advised fund or community foundation.
• Get a written acknowledgment from the charity that includes the number of shares, the transfer date, and a statement that no goods or services were provided in exchange for the gift. Keep your broker’s transfer confirmation and the charity’s receipt.
• If you have a concentrated position, consider alternatives such as charitable remainder trusts, donor-advised funds, or partial gifts over several years to manage AGI limits and tax exposure—see our pieces on concentrated stock strategies (Optimizing Capital Gain Timing for Concentrated Stock Events).

Documentation you must keep

• Broker confirmation of the transfer (date, shares, and receiving account)
• Charity’s written acknowledgment stating the gift date, number of shares, and a statement that you received no goods/services (required for substantiation)
• Copy of Form 8283 if applicable and any appraisal documents (rare for publicly traded stocks but required for certain non-public gifts)

IRS rules require written records for noncash contributions; failing to obtain them can jeopardize the deduction.

When to consult professionals

Donating publicly traded stock is straightforward in many cases, but consult a CPA, tax attorney, or financial planner when:

• You have a large concentrated position or plan to make a gift that would hit AGI limits.
• The asset is private stock, restricted, or illiquid.
• You’re considering complex charity structures (charitable trusts, DAF tax planning, or gifts of closely held businesses).

In my practice I regularly coordinate the brokerage transfer, prepare Form 8283 and model the AGI impact to ensure the client captures the intended benefit while staying within IRS rules.

Related FinHelp resources

• For a direct comparison of methods, see our article on giving stock vs. cash for practical and tax considerations: Giving Stock vs. Cash: Tax and Practical Considerations (https://finhelp.io/glossary/giving-stock-vs-cash-tax-and-practical-considerations/).
• If you’re thinking about non-public assets, read Donating Complex Assets: Real Estate, Private Stock, and Cryptocurrency for the special rules that apply: https://finhelp.io/glossary/donating-complex-assets-real-estate-private-stock-and-cryptocurrency/.

Final checklist before you donate

• Confirm charity’s acceptance and receiving broker details
• Verify 501(c)(3) status and get the charity’s written acknowledgment
• Choose long-term appreciated shares for maximum tax benefit
• Get broker transfer confirmation and prepare Form 8283 if required
• Consult a tax advisor if gift is large, complex, or from retirement-plan assets

Professional disclaimer: This article is educational and not personalized tax or legal advice. Tax laws change; verify current rules with the IRS (Publication 526 and Form 8283 instructions) and consult a qualified tax advisor or attorney before making large gifts.

Authoritative sources cited in text: IRS — Charitable Contributions (Publication 526), Form 8283 instructions (IRS), and guidance on noncash contributions (irs.gov). Additional practical guidance from leading custodians and charities (e.g., Fidelity Charitable) informed the transfer checklist and donor practices.