Donating appreciated stock to CFEF amplifies the benefits for both the donor and the organization:
- Enhanced Donation Value: By avoiding capital gains taxes, donors can contribute more substantial amounts, increasing the resources available for scholarships.
- Tax Efficiency: Receiving Utah’s 100% state tax credit maximizes the financial advantages of the donation.
- Meaningful Support: Contributions provide essential funding for students with disabilities, empowering them to access education that caters to their specific needs.
Case Study: Individual Investor Donation
Nearly a decade ago, one generous donor purchased $200,000 in stock that steadily appreciated to $250,000. Instead of selling the stock and facing a 20% capital gains tax (roughly $10,000), she chose to donate the full $250,000 in appreciated stock to Children First Education Fund (CFEF). By doing so, she not only avoided capital gains taxes altogether, but also received a 100% Utah state income tax credit for the entire amount of her donation. Her thoughtful gift directly empowered students with disabilities to access customized education options — and allowed her to redirect tax dollars toward a cause she deeply values, all at no net cost to her. She was also able to direct her entire gift to support scholarships at her favorite private school as well. That’s the power of smart giving with purpose.
How to Donate Appreciated Stock to CFEF
- Consult Financial Advisors: Before proceeding, donors should consult with financial or tax advisors to understand the implications and ensure the donation aligns with their financial goals.
- Contact CFEF: Reach out to executive director, Ronnie Daniel of the Children First Education Fund (ronnie@cfe-fund.org) to express the intent to donate appreciated stock. He can provide specific instructions and necessary forms.
- Transfer the Stock: Work with a brokerage firm to transfer the shares directly to CFEF’s brokerage account. This process ensures that the donor avoids capital gains taxes and qualifies for the associated tax benefits. CFEF is required to liquidate the transferred stock upon receipt, thus determining the value of the donation and the tax credit amount.
- Obtain Documentation: After the transfer, CFEF will provide a tax credit certificate for the Utah state income tax credit. Retain this documentation for tax filing purposes.
Conclusion
Donating appreciated stock to the Children First Education Fund is a strategic and impactful way to support the education of students with disabilities in Utah. This approach offers significant tax benefits, including the avoidance of capital gains taxes and a 100% Utah state income tax credit. By leveraging these advantages, donors can maximize their contributions, directly influencing the lives of children who benefit from tailored educational opportunities. Engaging in this form of philanthropy not only fulfills charitable intentions but also promotes financial efficiency, creating a win-win scenario for donors and scholarship recipients alike.