Gifting appreciated securities to charity
...a win/win situation for everyone involved
The benefits
Donating appreciated securities to charity has many tax advantages.
First, the amount of the deduction the donor receives is equal to the full value of the security at the time of the donation, not the donor's cost.
Second, the donor is never taxed on the appreciation in the security, and...
Third, the charity can sell the appreciated security and pay no tax on the donor's gain.
Donating appreciated securities to charity makes much more sense than first selling the security, paying the taxes and then donating the remaining proceeds to the charity. It saves the donor money on taxes, allows the donor to receive the full benefit of the tax deduction, and it allows the charity to receive the full value of the appreciated asset.
The how to
A simple way to donate appreciated securities to the charity of your choice is to set up a donor advised fund (e.g. Charles Schwab, Fidelity), and deposit the securities you would like to donate into the account (set up as the John & Mary Doe Charitable Fund, for instance). Once this has been done, the donor receives the deduction for the total value of the securities deposited in that year, even though the donor may decide to spread donations out over a period of years. Donations are made online on your behalf and to the charity of your choice.
Note: It's always a good idea to check with your tax advisor if you're contemplating making any sizable charitable donations.