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Gifts of Stock and Qualified Charitable Distributions from IRA's

 

Gifts of stock

Gifts of appreciated securities – stocks, bonds or mutual funds that have grown in value – may be made to either the FCL Education Fund (tax-deductible) or FCLCA (non tax-deductible).  Gifts of appreciated securities are most common, however, to the FCL Education Fund, which is a 501(c)(3) charity.

This is because such a gift often has tax advantages. You might even be able to make a larger gift than you would have otherwise given.

Donating appreciated stock to a charity avoids capital gains and gives you a charitable deduction for the current value of the asset

If you transfer long-term held stock (held more than one year) to a 501(c)(3) charitable organization such as FCL Education Fund, (rather than selling the stock and giving the cash) you do not have to pay the capital gains tax on the appreciated value of the stock, and you can take a charitable deduction for the full current value of the stock on the day you make the donation. (If you transfer stock that has not been held long-term, your deduction is limited to your original cost basis for the stock.)

A stock transfer to a nondeductible 501(c)(4) organization, such as FCLCA, also means that you do not have to pay capital gains tax although you are not eligible for a charitable tax deduction for the value of the stock itself.

Because there are individual considerations for each donor, e.g, which stock to donate, limitations on charitable deductions, etc., we recommend that you consult your financial advisor/tax professional for advice about making a gift of appreciated securities.

How do I make a gift of stock?

For stock held in your brokerage account: This stock can be electronically transferred to FCL Education Fund or FCLCA.  Download a sample letter you can send to your broker. Before the transfer, please notify us with the same information contained in the letter – email us at kevan@fclca.org or call us at (916) 443-3734.

Qualified Charitable Distributions from IRA's

Make a qualified charitable distribution (QCD) from your individual retirement account (IRA).

Have you reached age 70 ½ and are you required to make a minimum distribution from your IRA?

Perhaps you don’t need all of that distribution to live on and you would also like to make a charitable gift to a cause you believe in, like the FCL Education Fund. Consider making the gift as a qualified charitable distribution (QCD).

What is a QCD?

A QCD permits annual direct transfers to a qualified charity or charities of up to $100,000 of tax-deferred IRA savings. The distribution must be made directly to the charity.

These gifts count toward your Required Minimum Distribution but do not increase your income. This can be beneficial to many people because a higher income can have impacts such as increasing the tax on social security benefits and increasing Medicare insurance premiums.

We recommend that you first contact your financial advisor to see if a QCD make sense for your specific financial situation.

The charity must qualify as a 501(c)(3) organization and some charities such as private foundations and donor-advised funds do not qualify for a QCD.

Many IRA custodians have forms and additional information available to help you make a QCD.

It’s important to make a QCD in the right way. If the funds from the IRA are distributed directly to you first and then you in turn contribute them to the charity, that will not qualify. That’s because taxable IRA distributions made to you must be included in your adjusted gross income and will have other impacts on your tax situation.

You’ll want to contact the charity to make sure you have the correct name and have the custodian of your IRA make the check out directly to the charity. The custodian may send the check to the charity or may send the check to you and you may send the check to the charity. In either case, it’s a good idea to enclose a letter stating who the donor is and that the donation is a QCD. Be sure to get an acknowledgement letter from the charity documenting the donation.

If you would like to make a QCD in support the work of the FCL Education Fund in informing our supporters and the wider public about the issues that face California and our work to train grassroots activists on how to effectively lobby their legislators, here’s our info:

Formal name: FCL Education Fund   EIN number: 68-0062639

Address: 1225 8th Street, Suite 220 Sacramento, CA 95814  Attn: Kevan Insko