How to Donate Stock to Charity: Transfer Steps and Deduction Rules

To donate stock to charity, you transfer shares directly from your brokerage account into the charity’s brokerage account using a Letter of Authorization that lists the ticker, the number of shares, and the charity’s DTC and account numbers. The transfer usually settles in three to five business days. If you’ve owned the shares more than a year and they’ve gone up in value, you deduct the full fair market value on the transfer date and pay no capital gains tax on the appreciation.

Why the Direct Transfer Is Worth the Effort

The whole reason to hand over shares instead of cash comes down to capital gains. Say you bought stock at $20 and it’s now worth $100. Selling triggers tax on the $80 gain at long-term rates up to 20%, plus potentially the 3.8% net investment income tax. Transfer those same shares to a qualified charity and nobody owes that tax. You also generally deduct the full $100 fair market value, not the $20 you originally paid.¹

Selling first and donating the proceeds leaves the government’s share on the table. Transferring the shares directly redirects that money to the charity instead.

Hold the Shares More Than a Year First

The full fair market value deduction only applies if you’ve owned the shares for more than one year, which classifies them as long-term capital gain property.²

Donate shares held for a year or less and your deduction drops to your cost basis. If you bought at $800 and the shares are worth $1,000 after five months, you deduct $800.¹ The appreciation you’d normally deduct disappears from the math. If you’re close to the one-year mark, wait.

Get the Charity’s Account Details

Before you can move anything, contact the charity and ask for five pieces of information:

The charity’s exact legal name as registered with the IRS
The name of the brokerage firm holding the charity’s investment account
The DTC (Depository Trust Company) participant number for that broker, which routes the shares electronically
The charity’s account number at the brokerage
The name the account is registered under, which may not match the charity’s common name

Charities that regularly accept stock gifts usually have these details on their website or ready by phone. Verify every digit with a representative before you submit paperwork. A single wrong number can send shares to the wrong destination or leave them stranded in a suspense account.

Initiate the Transfer With Your Broker

Your brokerage will ask you to complete a Letter of Authorization, sometimes called a Transfer Initiation Form. It specifies the ticker symbol, the share count, and the account the shares should come from. Some brokerages let you do this through the online portal; others need a signed physical form. Electronic submissions move faster because the signature can be verified immediately.

Once submitted, your broker initiates the outbound transfer and coordinates with the charity’s broker so the incoming shares are expected and credited correctly. Publicly traded stock typically settles in three to five business days. Some brokerages charge a transfer-out fee for non-cash gifts. Watch your transaction history for a debit showing the shares leaving your account. When they disappear from your portfolio, your side of the transfer is done.

If you’re donating mutual fund shares, expect the process to take longer. Some funds are proprietary products held directly with the fund company rather than at a brokerage, and there’s no DTC transfer available in those cases. For a year-end donation, start well in advance.

How the Deduction Value Is Set

For publicly traded stock, fair market value on the donation date is the average of the highest and lowest selling prices on the exchange that day. If the stock traded between $100 and $110, the valuation is $105 per share.³ The donation date is generally the day the shares leave your account and land in the charity’s.

Non-publicly traded shares are harder to value. Restricted securities and private company stock usually trade at a discount, and the IRS expects the valuation to account for net worth, earning power, industry outlook, and any trading restrictions. For non-publicly traded securities valued over $5,000, the IRS requires a qualified appraisal.³

What You Can Actually Deduct This Year

Donations of long-term appreciated stock to public charities are capped at 30% of your adjusted gross income for the year.² With an AGI of $200,000, that’s a $60,000 deduction ceiling from donated stock.

There’s an alternative election that raises the limit to 50% of AGI, but it requires reducing your deduction to cost basis instead of fair market value.¹ For appreciated stock, the standard 30% limit with the full fair market value deduction almost always wins. The election really only helps when the shares haven’t gained much.

Anything above the AGI limit carries forward for up to five additional tax years.² Oldest carryover comes off first, and the balance keeps rolling until either the full amount is deducted or the five-year window closes.

One boundary to know: if you’re giving to a private non-operating foundation rather than a public charity, the AGI limit for appreciated property drops to 20%, and for closely held or private company stock the deduction is limited to cost basis.⁴¹

If the Shares Are Down, Sell First

Donating stock worth less than you paid for it is the wrong move. Your deduction would be limited to the current fair market value, and you’d forfeit the capital loss you could otherwise claim. Sell the shares yourself, take the loss on your return, then donate the cash. You still get the charitable deduction, and you also get the tax benefit of the loss. Handing the depreciated stock directly to the charity throws one of those two benefits away.

Paperwork After the Transfer

For any contribution of $250 or more, you need a written acknowledgment from the charity. It has to include the charity’s name, a description of the shares donated, and a statement about whether the charity provided any goods or services in return.⁵ The charity does not state the dollar value. You determine that using the fair market value method above.

If your total non-cash charitable contributions for the year exceed $500, you file IRS Form 8283 with your return.⁶

Publicly traded stock does not require a qualified appraisal, regardless of value. This gets misreported often. The Form 8283 instructions put publicly traded securities in Section A even if worth more than $5,000; Section B, which requires an appraisal, applies only to non-publicly traded securities and other property over that threshold. A security counts as publicly traded if it’s listed on an exchange with daily published quotations, regularly traded on a national or regional over-the-counter market, or (for mutual fund shares) quoted daily in a national newspaper.⁶

For non-publicly traded stock valued over $5,000, you need a qualified appraisal from someone with relevant education and at least two years of experience valuing that type of property, and the appraiser must complete Part IV of Form 8283. The charity’s authorized representative also signs the form acknowledging receipt.⁷

Donor-Advised Funds if You Haven’t Picked a Charity Yet

A donor-advised fund lets you take the tax benefit now and decide on recipient charities later. You transfer appreciated stock into the fund, deduct it in the year of the transfer, and then recommend grants from the fund whenever you’re ready. The fund sponsor handles liquidation and grant-making. Most major brokerages offer these accounts, with minimum initial contributions typically between $5,000 and $25,000. The same holding period and fair market value rules apply to the transfer into the fund.

The gift is irrevocable once made. You can recommend where grants go, but you can’t pull the money back. For anyone who gives regularly and wants to batch several years of giving into one large stock transfer, a donor-advised fund cuts the paperwork considerably.

1
Internal Revenue Service. Publication 526 (2025), Charitable Contributions
2
Office of the Law Revision Counsel. 26 USC 170 – Charitable, etc., contributions and gifts
3
Internal Revenue Service. Publication 561 (12/2025), Determining the Value of Donated Property
4
Internal Revenue Service. Charitable Contribution Deductions
5
Internal Revenue Service. Charitable Contributions: Written Acknowledgments
6
Internal Revenue Service. Instructions for Form 8283 (12/2025)
7
Internal Revenue Service. Instructions for Form 8283 (Rev. December 2025)