As you are well aware, donating highly-appreciated stock to a fund at the Omaha Community Foundation typically offers significant tax advantages for your clients when compared to donating cash. Communicating this benefit, however, can be challenging when clients have an emotional attachment to their shares.

How can you overcome this hurdle and help optimize your clients’ charitable giving strategies?

Start by understanding the reasons a client might be reluctant to part with certain stocks in the first place:

  • Legacy: “These shares have been in my family for generations.”
  • Professional: “I worked at this company for decades. It’s the source of my wealth.”
  • Simple preference: “I just love this stock.”

Emotional ties like these can create psychological barriers to effective charitable planning. There is, however, a potential solution that can satisfy both your clients’ emotional needs and their charitable giving goals: The client donates shares of the highly-appreciated, emotionally significant stock to their fund at the Omaha Community Foundation, then purchases shares of the same stock for their personal investment portfolio.

Here’s why this can be such an effective strategy:

  • Maximize tax deductions: Publicly-traded securities are typically deductible at fair market value (and the tax savings could potentially help fund the repurchase).
  • Reset cost basis: This transaction effectively resets the cost basis of the stock in the client’s personal portfolio to its current market price, potentially reducing future capital gains taxes.
  • Emotional satisfaction: Clients can support charities while maintaining their shareholder status in the company.
  • Community impact: The Omaha Community Foundation can sell the donated shares tax-free, thereby maximizing the proceeds flowing into the client’s fund, and the fund, in turn, can be used to support the client’s favorite causes.

As you share this strategy with your clients, be sure to acknowledge the emotional value of the stock and emphasize the opportunity to maintain ownership in the company. Building on this, you can show the client how the tax benefits of giving stock allow them to make an even bigger difference in the community than if they’d donated cash.

As always, the Omaha Community Foundation can help you assist your clients with selecting the most tax-savvy assets to donate to charity by evaluating the tax implications of various giving strategies. We can then help you and your client structure donations to achieve strong community benefit.

Have questions about donating non-cash assets like stock or real estate? Reach out to the Donor Services Team at the Omaha Community Foundation: giving@omahafoundation.org or 402-342-3458.