Donating stocks and other securities to the Diocese of Nashville, its parishes, schools or ministries is one way to support a cause important to the donor while taking advantage of breaks offered in the tax laws.
“It’s better than cash in my opinion,” Joe Budd, of the financial planning firm Budd and Melone Company, said of donating stocks and securities.
If a person sells a stock and then donates the money to a charity like the diocese, they have to pay capital gains taxes on the proceeds from the sale, Budd explained. But if they donate the stocks as a gift, and the charity sells the stock, then neither the donor nor the non-profit charity are required to pay capital gains taxes, he said.
“It doesn’t have to be an individual stock,” said Budd, a parishioner at Holy Family Church in Brentwood. “It can be shares in a mutual fund. It can be any type of security. They can gift that to the Church and not have to give cash.”
Budd, whose offices are in the Cool Springs area in Franklin, has been helping families with their financial planning for 20 years.
There are a variety of situations where donating stocks or securities might be the most advantageous way for an individual to support a ministry or charity important to them, he said.
“When somebody has a lot of one stock it can cause a diversity problem,” Budd said. Donating some of the stock allows them to better balance their investment portfolio and take advantage of the tax break by making a charitable donation, he said.
When people who are older than 70 and a half years old and under federal law have to take a required minimum distribution from their IRA accounts, they have to pay taxes on those distributions, Budd said. But if they make a qualified charitable distribution from their IRA to a non-profit charity, they can avoid the tax bill on the distribution and support a cause important to them, he added.
“It’s the same way when you get into estate planning,” Budd said. When people inherit the balance of an IRA, they have to pay taxes on that money, he said. But people can name the non-profit charity as the beneficiary and avoid paying taxes on the donation, Budd added.
“Stock gifts are quick and easy to make,” said diocesan Stewardship Director Ashley Linville. All they require is a quick call to a person’s stock broker, he said.
“It’s a pretty easy process,” Linville explained. Once a person donates the stock to the diocese or the parish, the stock is sold and the proceeds go to the recipient, he said. “We don’t hold onto the stock.”
People should consider charitable donations as part of their estate planning, Budd said. As people get older and have built up their net worth, they start to think about how they can leave behind a legacy for their family and the charities they care about, he said.
When people realize there are many options available to them, Budd said, “They go ‘wow … I can leave a legacy behind.’”
Planned giving can take many forms, the most common of which is a bequest in a person’s will, Linville said. But there are other ways, such as trusts, charitable gift annuities or life insurance policies, he added.
Each method offers a different tax advantage to the donor, depending on what their individual situation is, Linville said.
“First thing I would always recommend if somebody is interested in making a planned gift or the tax advantages of planned giving, always first talk to their financial advisor or attorney,” Linville said. “They’ll always know the person’s situation in detail and know what types of gifts are best for them so they can maximize their gifts to their loved ones and to the Church and their favorite charities.”
Donors can make a planned gift to their parish, the diocese or their favorite ministry, Linville said.
“There are lots of ministries to give to, including Catholic education and vocations,” he said. “I’m happy to talk about specifics when they want to direct their gift.”
“A planned gift is one of the ways to reflect what one’s passions have been in life,” Linville said. “Church is such an important part of their lives and their faith is such an important part of their lives.”
Planned giving “is one way people can make a transformative gift they might not be able to make in their lifetime,” he added. “It’s a way to leave a legacy and an impact.”
As the year draws to a close, many people are considering an end of year charitable gift because of the tax advantages, Linville said.
Again, Linville recommends talking to a financial advisor or attorney to determine the most advantageous way to make an end of year gift depending on the situation of each individual.
To get credit for the gift on a person’s taxes this year, the donation must be made by Dec. 31. The gift can be made online. If someone mails in their donation, it must be postmarked by Dec. 31.
For information about remembering a parish or the diocese with a planned gift or with an end-of-year gift, contact Linville at email@example.com or 615-645-9768.