To donate stock to a nonprofit, you transfer shares directly from your brokerage account to the charity’s brokerage account using a signed transfer authorization from your broker. The mechanics are simple once you have four pieces of information from the charity, but the tax outcome depends on which shares you pick and when the transfer settles. Done right, you skip capital gains tax on the appreciation and deduct the shares’ full market value.
Gather the Information Before You Touch the Paperwork
Two sets of details need to be in front of you before you contact your broker: information about the receiving charity and information about the specific shares you plan to give.
What You Need From the Charity
Call the nonprofit’s development or finance office and ask for four things:
- The organization’s full legal name as registered with the IRS
- Its nine-digit Employer Identification Number
- Its brokerage account number
- Its Depository Trust Company (DTC) participant number, which routes the shares to the correct brokerage firm
Most larger charities have a stock donation instruction sheet they can email you with all four in one place. Get the legal name exactly right. Even a slight variation can route shares to the wrong entity or freeze the transfer in your brokerage’s compliance review.
What You Need About Your Shares
Write down the ticker symbol and the number of shares. If you bought the same stock in more than one purchase, you probably have multiple tax lots with different cost bases and holding periods. That distinction drives the deduction. Shares held more than one year qualify for a deduction at full fair market value; shares held one year or less limit your deduction to what you originally paid.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts Note each lot’s purchase date and cost basis. Picking the lots with the lowest basis and the longest holding period gives you the biggest deduction relative to what you invested and eliminates the most embedded gain.
Fill Out the Transfer Authorization
Your brokerage needs a written directive to release the shares. Firms use different names for the form: Letter of Instruction, Stock Power form, or asset transfer request. You can usually download it from the broker’s website under account services or ask your advisor to send one.
Fill in the charity’s legal name, EIN, DTC number, and brokerage account number in the recipient fields. Enter the ticker, the number of shares, and the specific lots. Be precise. Compliance departments reject forms with missing or mismatched details, and each rejection costs days. If you plan to donate your entire position in a stock, write that on the form rather than listing a share count that might not match after a recent dividend reinvestment.
If you are giving only some of your shares, select “specific identification” as the cost basis method and list the lots by purchase date. This is where the tax planning happens. If you do not specify, your broker may default to first-in, first-out, which is often not the most tax-efficient choice. Sign and date the form.
Submit and Wait for Settlement
Most brokerages accept the signed form through a secure online portal, which is the fastest route. Fax and overnight mail are the fallbacks. For high-value transfers, your broker may require a Medallion Signature Guarantee, a special stamp that verifies your identity and authorization. You can get one from a bank, credit union, or brokerage where you are an existing customer, usually at no charge.2Investor.gov. Medallion Signature Guarantees: Preventing the Unauthorized Transfer of Securities
Once your brokerage processes the form, the shares move electronically through the Depository Trust Company’s settlement system. Individual stocks typically clear in three to five business days. The donation is complete when the shares land in the charity’s account, not when you submit the paperwork.3Internal Revenue Service. Publication 526 – Charitable Contributions
Year-End Deadline
If you want the deduction on this year’s return, the transfer must settle by December 31. Because processing takes several business days and brokerage back offices slow down in late December, start any year-end donation by mid-December. A transfer submitted on December 28 that settles on January 3 counts for the following tax year. The IRS treats the gift as made on the date the shares reach the charity’s account.
Mutual Funds Take Longer
Mutual fund shares are harder to move than exchange-listed stocks. They often cannot pass between accounts at different brokerage firms when registrations do not match, and the workarounds sometimes involve opening a temporary account or routing the shares through the fund company directly. Timelines stretch to several weeks. If you are giving mutual fund shares, confirm the procedure with both your broker and the charity’s receiving institution before you start.
When Donating Stock Does Not Work in Your Favor
The strategy assumes appreciated shares held more than a year. Two situations flip the math.
If your shares are worth less than what you paid, donating them directly means you forfeit the capital loss you would have claimed by selling. The better move is to sell the shares, take the capital loss on your return to offset other gains or up to $3,000 of ordinary income, and donate the cash. You still get a charitable deduction for the cash gift and you capture the loss on top.
Short-term shares are also usually a poor donation. Your deduction is capped at your cost basis rather than fair market value, so you get no credit for the appreciation and you give up the ability to harvest a loss if the position is underwater. Hold to the one-year mark or donate a different lot.
How the Deduction Is Calculated
For publicly traded stock, the IRS defines fair market value as the average of the highest and lowest quoted selling prices on the date the gift is complete.4Internal Revenue Service. Publication 561 – Determining the Value of Donated Property If the high for the day was $110 and the low was $104, your per-share value is $107. That is the number you use, not the closing price and not the price at the moment the transfer settled.
Your deduction for appreciated stock held more than one year and given to a public charity is capped at 30% of your adjusted gross income for the year. On an AGI of $200,000, that is $60,000 in stock donations deductible this year. Amounts above the ceiling carry forward for up to five years, subject to the same limits each year. Anything still unused after five years expires.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
Paperwork at Tax Time
Written Acknowledgment From the Charity
For any donation of $250 or more, you need a written acknowledgment from the charity before you file the return. It must show the organization’s name, the date of the gift, a description of the shares (not a dollar amount), and a statement about whether the charity gave you anything in exchange.5Internal Revenue Service. Charitable Contributions: Written Acknowledgments Most nonprofits send it automatically. Follow up if it does not arrive within a few weeks of the transfer completing. Without this letter, the IRS can disallow the entire deduction.
Form 8283
If your stock donation is worth more than $500, file IRS Form 8283 with your return. Publicly traded securities go in Section A regardless of value, and they do not require a qualified appraisal even above the usual $5,000 threshold that applies to other noncash gifts.6Internal Revenue Service. Instructions for Form 8283 You list the stock’s name, the contribution date, the original acquisition date, and the fair market value on the day of the gift.
When a Donor-Advised Fund Is the Better Route
If the charity you want to support does not have a brokerage account, or if you want to donate stock now and decide the recipients later, a donor-advised fund solves both problems. You transfer the appreciated shares to a DAF account at a sponsoring organization such as Fidelity Charitable, Schwab Charitable, or a community foundation. The transfer triggers your deduction at fair market value the moment the shares are received. The DAF sells them tax-free, and the proceeds sit in your account until you recommend grants to specific nonprofits.
The split timing is the point. You lock in the deduction in the year you fund the account, but the money can flow out to charities over several years. That is useful when you want to liquidate a large position charitably in one tax year but spread the giving out. The 30% AGI limit still applies to the initial contribution, and any excess carries forward the same way.1Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts