While cash gifts are the most popular type of charitable contribution, an even more tax-friendly way to support Mission Hospitals is through gifts of appreciated holdings. Such holdings include:
- Securities (stocks and bonds)
- Property (real estate and personal property, such as art)
- Retirement plans
- Business interests (partnerships, C corp., S corp.)
Donors who give appreciated holdings to Mission not only receive a charitable deduction on their income taxes but also avoid taxes on the capital gains portion of their donated assets.
In essence, a donation of $10,000 of an appreciated holding, such as shares of stock, offers greater tax savings than a donation of $10,000 in cash. Here is an example:
Two neighbors, "Bill Cash" and "Sally Goodstock," decided to donate to a local charity. Mr. Cash made his gift in cash, sending the charity a $10,000 check. Because he submits itemized tax returns and he is in the 31 percent income tax bracket, Mr. Cash can look forward to saving $3,100 in taxes. Thus, his gift to charity will cost him only $6,900.
Sally Goodstock invested $5,000 in a hot stock that has grown to a value of $10,000 in 16 months. When she made a direct gift of her shares of stock to charity, she entirely bypassed the capital gains tax. Mrs. Goodstock receives an income tax deduction for a gift of $10,000, which saves her $3,100 in taxes (she is in the 31 percent tax bracket). In addition, she also has saved $1,000 in capital gains taxes (her $5,000 profit from her appreciated stock would have been taxed at a 20 percent rate). Therefore, it only cost Sally $5,900 to make a $10,000 donation. As this example illustrates, gifts of appreciated holdings such as stock offer greater benefits to donors than gifts of cash.
