Adam Nash, CEO & co-founder of Daffy, a fintech platform that focuses on charitable giving, joined Cheddar News to discuss the tax benefits of donating stocks instead of cash.

Adam Nash, CEO &amp; co-founder of Daffy, a fintech platform that focuses on charitable giving, joined Cheddar News to discuss the tax benefits of donating stocks instead of cash.

The Tax Benefits of Stock Donations 

and it is the season of giving. We continue our series celebrating holiday moments here on Cheddar news in this week's theme is giving. So did you know that many charities accept other assets besides cash as donations, including stocks, not only benefits the nonprofit of your choice, but has many tax benefits for you, the giver as well. So joining me now to explain the best ways to do this is Adam nash Ceo and co founder of Daffy, a Fintech platform focusing on charitable giving. Um, ADam thanks so much for coming on the show. How does stock donation work Kristen? It's, it's actually very easy. Most wealthy investors have known for a long time that if you have the choice between donating cash or donating stocks and ETFS, it's almost always better to donate stocks and ETFS and companies like mine make it very easy this holiday season to donate stock and crypto to the charity of your choice. Okay, so what do we need to know, why is it more beneficial to donate stock versus cash? Well, there's two big reasons. One um, the charitable deduction is one of the best deductions in the tax code, up to 30% of your adjusted gross income or 50% with cash. And of course it's against the income tax rates, which are higher than capital gains tax rates. But the second secret is that when you donate appreciated stock, you never pay capital gains taxes on that stock. And so you get more money to give and the charity gets more money in turn, what stocks and crypto assets. Adam might be good options here for anyone who is looking to donate. Well the answer is anything that has a capital gain that you've held more than a year is a great candidate. Um that may be hard in 2022 but if you've been an investor for some time you may have index funds that go back 35 even 10 years that are sitting on a lot of capital gains. Donating those shares to charity is a great way to eliminate that tax liability and have more money to give this holiday season. So what about making stock donations over time instead of versus in one lump sum? What would be the pros and cons associated with that? Well, this is the secret that most wealthy investors also know is that that's what a donor advised fund for. Um Daffy of course stands for the donor advised fund for you. But if you contribute stock or crypto into a donor advised fund you get the immediate tax deduction this year and you have time to spread out your donations over months or even years and the money is invested along the way. So it's working for you. Do all charities accept stock donations adam. Is that something that you should check on before you decide to make this giving pledge? Unfortunately out of the 1.5 million or more charities in the U. S. Only a few 1000 except stock donations. That's why services like Daffy are so useful. We take the stock and then you can donate the cash to any of those 1.5 million legal charities across the U. S. Okay. Any other tax rules adam that people need to know if they are interested in donating stock or crypto? Well the biggest one is to make sure that you itemize deductions with the higher standard deduction from the tax law a few years ago. That can be hard for some individuals. Which is why they take a strategy called bunching take the money you were going to give to charity over the next few years and put it in a donor advised fund this december. You'll get the best tax deduction this year when your taxes are high and you can spread out those donations over years to the organizations that need it. I do think timing is is interesting. Um Of course the more you can plan oftentimes the better off you are adam. But are there advantageous times to make these donations? Well listen I think different organizations support different causes. But if you talk to most of what they really want is regular support. What we see our members doing is funding their accounts with stock or crypto to make sure that they have enough money to give regularly. So that when times are tough like have been this year you have money to give organizations even if your income is a little off one year or another in terms of amounts. Is there sort of an average amount that people typically gift when it comes to stock donations? You know, it really varies. Um We encourage people to set a giving goal an amount that they give every year, but that number is different for everyone. It could be a percentage of your salary. It could be a fixed amount. From our perspective. We just want to encourage people to set a goal just like having a goal for retirement or for saving for your kid's college. If you set a financial goal for giving, it makes it more likely that you'll give. And research shows that people who set a goal actually give 32% more than people who don't. Alright. Goal planning, planning ahead. Always a good idea. Adam, Nash Ceo and co founder of Daffy Adam. Thank you.