How to Donate Stock to Charity: Transfer, Valuation, and Deduction Rules

To donate stock to charity, you sign a Letter of Authorization telling your broker to move specific shares from your account to the charity’s brokerage account through the Depository Trust Company (DTC) system, then keep the paperwork the IRS requires to claim the deduction. Done this way, you skip the capital gains tax you would owe if you sold the shares yourself, and you can generally deduct the full fair market value on the day the shares land in the charity’s account. Selling first and donating the cash gives up both advantages.¹

Which Shares Actually Give You the Full Benefit

Three things about the stock decide how much of a deduction you get.

Long-Term Appreciated Shares

The full-fair-market-value deduction is only available for long-term capital gain property: shares you have held more than one year that are worth more than you paid.² Publicly traded shares are the cleanest case, because their value is easy to verify and no appraisal is required.³

Short-Term Shares

You can still donate stock held a year or less, but the deduction is capped at your cost basis rather than the current price.⁴ If a recent purchase has jumped in value, waiting until it qualifies as long-term usually produces a bigger deduction.

Depreciated Shares

If the shares are worth less than you paid, donating them directly is a poor strategy. Your deduction is limited to the lower current value, and you lose the capital loss you could otherwise claim. Sell the shares first, take the loss on your return, and donate the cash.

Confirming the Charity Qualifies

Your deduction depends on the recipient being a qualified organization under Section 501(c)(3), which covers most religious, educational, hospital, and nonprofit charitable groups.⁵ Government entities receiving the gift for public purposes, war veterans’ organizations, and volunteer fire companies also qualify.⁶

A donor-advised fund (DAF) is a common alternative when you want the deduction now but need time to pick the ultimate recipients. You transfer the stock to the DAF, take the deduction in the year of the transfer, and recommend grants to specific charities on your own schedule.

Information You Need Before You Start

Ask the charity for four things: its legal name, its nine-digit Employer Identification Number, the name of its brokerage firm, and its account number and the firm’s DTC participant number at that brokerage. The DTC participant number is the code that identifies the receiving brokerage inside the national clearing system.

On your side, you need the stock’s ticker symbol, the exact number of shares you plan to transfer, and the CUSIP number, a nine-character code that uniquely identifies the security.⁷ Your broker can supply the CUSIP if you do not have it.

Your brokerage will provide a Letter of Authorization (sometimes called a Letter of Instruction) or stock power form to sign. Some charities send their own pre-filled version. Every field matters, especially share count and CUSIP; a small error causes the transfer to bounce.

Executing the Transfer

Once you submit the signed authorization, your broker moves the shares through the DTC system into the charity’s account. No certificate changes hands. Most publicly traded stock transfers settle in three to five business days. Watch your account for the debit, and confirm with the charity that the shares arrived. Once the receiving firm accepts them, the gift is final and cannot be reversed.

Mutual fund shares are slower. If the fund is held at a different institution than the charity’s account, expect four to six weeks, because the transfer routes through fund companies rather than a straight DTC settlement.

Which Date the IRS Counts

For an electronic transfer, the donation date is the date the shares are recorded on the issuing corporation’s books, which in practice is the date they arrive in the charity’s brokerage account.⁸ That date sets both the value of the gift and the tax year. It is the reason year-end donations should be started early in December: initiating on December 28 does not guarantee the shares clear by December 31.

Valuing the Gift

Fair market value for publicly traded stock is the average of the high and low selling prices on the donation date.⁹ If the shares did not trade that day, the value is a weighted average of the nearest trading days before and after, giving more weight to the closer day.

Deduction Rules That Determine Your Payoff

You Have to Itemize

A charitable deduction for donated stock only helps if you itemize on Schedule A instead of taking the standard deduction.¹ For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.¹⁰ Your combined itemized deductions have to clear that number for the stock gift to move your tax bill.

The 2026 AGI Floor

Starting in the 2026 tax year, under amendments from the One Big, Beautiful Bill Act, charitable contributions are only deductible to the extent they exceed 0.5 percent of your adjusted gross income.¹⁰ At $200,000 AGI, the first $1,000 of contributions is not deductible. The floor applies before the percentage caps below.

Percentage Caps

Long-term appreciated stock given to a public charity is deductible up to 30 percent of AGI in the year of the gift.⁴ Appreciated stock given to most private foundations is capped at 20 percent of AGI. You can elect a 50 percent AGI limit instead, but that election drops your deduction from fair market value to your cost basis, so it is only worth doing when basis and market value are close.¹

Carryforward

Anything you cannot deduct in the year of the gift because of the AGI cap carries forward up to five additional tax years, subject to the same limits in each year and used only after that year’s current contributions.⁴

Paperwork the IRS Requires

Written Acknowledgment From the Charity

Any gift of $250 or more needs a contemporaneous written acknowledgment from the charity showing the date, a description of the shares, and a statement of whether the charity gave you anything in return.¹¹ Contemporaneous means you have it in hand by the time you file the return for that year. Request it; charities do not always send it automatically.

Form 8283

If your total noncash contributions for the year exceed $500, you must file Form 8283 with your return.¹² Section A covers deductions above $500, and it is where publicly traded stock is reported regardless of value, because publicly traded securities are exempt from the appraisal rule. Section B is required when the deduction exceeds $5,000 for property other than publicly traded securities, primarily closely held or private company shares, and it must be signed by the appraiser and an authorized representative of the charity.¹³

Qualified Appraisal for Private Stock

Closely held or private company stock worth more than $5,000 requires a qualified appraisal from an independent appraiser.⁸ The appraiser must hold a professional appraisal designation for that type of property, or have completed relevant coursework and at least two years of experience valuing it. The charity cannot serve as the appraiser. Appraisal fees for private company stock generally run from $5,000 to $20,000 or more depending on the company. Skipping the appraisal when one is required can cost you the entire deduction.

Records to Keep

Hold onto your brokerage confirmation showing the debit and the transfer date, plus the stock’s high and low prices on that date. Those records back up the deduction if the IRS asks later.

Two Situations That Need Extra Care

Shares in a private company are often subject to transfer restrictions in the company’s bylaws or a shareholder agreement, and other shareholders or the company may hold a right of first refusal. Check those documents before offering the shares, and talk with the charity about how it would liquidate stock that has no public market.

Shares received through employer equity compensation may be restricted or control stock under SEC Rule 144, which commonly affects officers, directors, and holders of more than 10 percent of a company’s outstanding stock. You can donate them, but the charity inherits the same resale limits, which can reduce what the gift is actually worth to the organization. Talk to a securities attorney before transferring equity compensation shares.

1
Internal Revenue Service. Publication 526 (2025), Charitable Contributions
2
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
3
Internal Revenue Service. Charitable Organizations Substantiating Noncash Contributions
4
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
5
Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations
6
Internal Revenue Service. Charitable Contribution Deductions
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Investor.gov. CUSIP Number
8
Internal Revenue Service. Publication 561 (12/2024), Determining the Value of Donated Property
9
eCFR. 26 CFR 20.2031-2 – Valuation of Stocks and Bonds
10
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
11
Internal Revenue Service. Substantiating Charitable Contributions
12
Internal Revenue Service. Instructions for Form 8283 (Rev. December 2025)
13
Internal Revenue Service. Instructions for Form 8283