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Professional Advisor Newsletter
May 2022
Background: Numbers displayed as they are for stocks - Caption: Cash crunch: Charitable giving during high inflation

For clients who rely on fixed-income assets, such as bonds and wages, to cover their living expenses, the inflation pinch indeed may mean fewer dollars available for charitable giving.

Still, for clients who own property, stocks and other assets that tend to go up in value in an inflationary environment, now may be a good time to take advantage of tax-savvy giving of highly-appreciated assets – especially stocks that pay low (or no) dividends and therefore are not crucial to maintaining a client’s income levels.

Giving highly appreciated stock remains one of the most effective ways your clients can support their favorite charities. That’s because when a taxpayer gives stock to a public charity, such as a Donor Advised Fund at the Idaho Community Foundation, instead of selling it outright, the capital gains tax is avoided. Plus, marketable securities are typically deductible at their fair market value, further helping your client’s overall income tax situation.

As you counsel a client who is emotionally attached to a particular stock, don’t let that attachment prevent a client from making a smart tax move. Your client can donate shares of the highly appreciated favorite stock and then immediately repurchase the same number of shares. This essentially resets the client’s cost basis to the current price, which could help reduce capital gains taxes on a future sale.

Finally, remind your clients that there are significant differences in the tax treatment of donating cash versus securities. Currently, the deductibility of gifts of cash to a public charity is limited to 60% of adjusted gross income, versus gifts of non-cash assets to a public charity which are deductible up to only 30% of adjusted gross income.

Also, remind your clients that the maximum benefits associated with giving appreciated assets to a public charity are realized only with long-term capital gains property, in which case the deduction is set at the fair market value of the property on the date of the gift; gifts of short-term capital gains property are valued at cost basis for purposes of calculating the deduction.

The team at the Idaho Community Foundation is here as a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as your “back office” as you manage the primary relationship with your clients.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting or financial planning advice. 

For more information about ICF, please contact us:

Kris Kamann Rich Ballou Background: Peter Faucher standing in front of brick building
Kris Kamann
Senior Philanthropic Advisor
(208) 342-3535 x14
Rich Ballou
Philanthropic Advisor
East Idaho
(208) 342-3535 x22
Peter Faucher
Philanthropic Advisor
North Idaho
(208) 342-3535 x23

Idaho Community Foundation
210 West State Street  •  Boise, ID 83702
Phone: 208.342.3535  |  Fax: 208.342.3577  |  Email: info@idahocf.org