6 ms·

I've been wondering if she does in-kind donations, so that she can donate shares instead of selling the shares first to donate cash. From my dabblings in the n

I've been wondering if she does in-kind donations, so that she can donate shares instead of selling the shares first to donate cash. From my dabblings in the non profit space, I'm finding many are unprepared to accept anything aside from cash. There are also major tax advantages for doing so, since you can avoid the long term capital gains tax while also getting a charitable tax deduction for the full value of the shares donated. That's probably my favorite tax code to be honest.

H8crilA 5y ago
FWIW: Buffett is donating shares. Also, he sometimes talks about an interesting problem where the non-profit may not be allowed to hold shares of companies in certain industries (ex: insurance), and of course Berkshire is involved in almost every industry, certainly in insurance big time.
- vmception 5y ago
  so they just sell immediately and its no problem? or does momentarily holding it tarnish their reputation or whatever since filings from donors can be public.
jvanderbot 5y ago
Any reasonable non-profit will accept stock, and every non profit I've been involved with liquidates them immediately and uses the money. Generally, a mission-driven org needs money, not a well-balanced stock portfolio. It's quite a hit to their ``ratings'' as well, if they keep large un-spent sums of money around. Just imagine the clickbait article showing a non-profit hoarding stock instead of helping children in need. Those that do are rightfully derided so much that honest non-profits that are just trying to build their own infrastructure with self-directed spending are caught in the crossfire for not investing in ``programs'' enough.
- enchiridion 5y ago
  Rightfully? I mean the goal is a non-profit is to help with a specific problem in one way or another. Often long term goals are involved, so I don’t see any problem with holding appreciating assets so the power and influence of the organization can be maintained into the future. Of course using non-profits for investing shell games is probably a whole different problem I am not familiar with. But holding assets as a whole doesn’t seem like a big issue to me.
  - jvanderbot 5y ago
    I believe it is right to provide recommendations against non-profits that hold significant assets in investments. I don't think it should be illegal or anything, but I do think that potential donors should be cautioned about this. Most people have the expectation that they are donating to fix a problem or keep an organization running, not increase the returns on investments. If a non-profit has a long-term strategy, that should probably involve setting up _other_ institutions that can self-sustain, rather than "We'll get rich first". The _problem_ is that this translates to some expectation that every dollar given should go immediately to purchasing something, and that somehow it's "more effective" for a person to go purchase things than to donate to, say, red cross. That's dead, dead wrong. Give money, let them invest in solutions. However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.
- vmception 5y ago
  yeah that's probably true, I guess the reality is that I wasn't looking at ones accepting stock, but physical art and crypto. Some do and that number is growing by orders of magnitude each year because its now the 2020s, but many think it's still the year 1997. It is surprising how low tech that entire sector is. It seems to be a recurring story for new entrants to the non profit space to be the "tech savvy one doing things differently", because the whole space is, I guess, not market driven as it isn't motivated by being technologically aware. Only getting a few recurring donors and doing their mission.
  - jvanderbot 5y ago
    In each case, it is liquidated and used as cache. Some of the skill of the best philanthropy folks is in finding ways to offload these wonky donations that donors think are useful. However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.
PragmaticPulp 5y ago
> From my dabblings in the non profit space, I'm finding many are unprepared to accept anything aside from cash. If you’re donating huge amounts of money, you have lawyers to help those companies figure it out. If you’re a small-time donor, trying to saddle a tiny non-profit with all of the extra hassle and legwork of accepting appreciated shares just so they can take your one-off donation is counter-productive (unless they're already set up for this, obviously). They might end up spending more time and money figuring out how to deal with your single donation than they would gain from accepting it, which is why they don’t bother. The solution is easy, though: Set up a “Donor Advised Fund” through any number of major brokerages. They will handle the liquidation of your shares and mail a check to the charities you choose. Couldn’t be easier for both you and the charity.
- fsckboy 5y ago
  > all of the extra hassle and legwork of accepting appreciated shares just so they can take your one-off donation is counter-productive going to etrade.com and opening an account, followed up by mailing proof of being a nonprofit? It's as easy as that, I ask charities to do it all the time.
chadash 5y ago
Here's a tip that pretty much every philanthropist out there knows, but would probably be helpful to the HN crowd. If you donate appreciated stock, you get a "double" tax break, since you don't pay capital gains tax and you also can deduct the donation amount. For example, you have $1000 of tesla shares that you bought for $100 a few years ago. You want to donate some money to charity now. If you sold those shares and put them in your bank account and then donate cash, you'd owe capital gains tax (15 or 20% depending on tax bracket) on the $900 gain. So if you donated all of your Amazon stock that way, you would give a donation of $1000 - (900 x 0.15) = $865 and you can take an $865 tax deduction if you itemize. Alternatively, you can donate $1000 of appreciated tesla shares directly to a charity. Now, you don't owe capital gains, AND you can take a $1000 tax deduction. Double win. Rich people who give to charity are well aware of this loophole. For them, it pretty much never makes sense to donate cash if they have appreciated assets they can give instead (at the very least you might as well donate the stock and then buy it back later at a higher cost basis, although I think there might be rules about buying the exact stock again within 30 days). And in my experience, most charities are happy to take stock for this reason... because their major donors only want to give stock, so they already have the infrastructure in place for accepting it.*
- vmception 5y ago
  That’s literally what i wrote in 1000 less words
- deleted 5y ago
  [deleted]

H8crilA 5y ago

FWIW: Buffett is donating shares. Also, he sometimes talks about an interesting problem where the non-profit may not be allowed to hold shares of companies in certain industries (ex: insurance), and of course Berkshire is involved in almost every industry, certainly in insurance big time.

vmception 5y ago
so they just sell immediately and its no problem? or does momentarily holding it tarnish their reputation or whatever since filings from donors can be public.

jvanderbot 5y ago

Any reasonable non-profit will accept stock, and every non profit I've been involved with liquidates them immediately and uses the money. Generally, a mission-driven org needs money, not a well-balanced stock portfolio. It's quite a hit to their ``ratings'' as well, if they keep large un-spent sums of money around. Just imagine the clickbait article showing a non-profit hoarding stock instead of helping children in need. Those that do are rightfully derided so much that honest non-profits that are just trying to build their own infrastructure with self-directed spending are caught in the crossfire for not investing in ``programs'' enough.

enchiridion 5y ago
Rightfully? I mean the goal is a non-profit is to help with a specific problem in one way or another. Often long term goals are involved, so I don’t see any problem with holding appreciating assets so the power and influence of the organization can be maintained into the future. Of course using non-profits for investing shell games is probably a whole different problem I am not familiar with. But holding assets as a whole doesn’t seem like a big issue to me.
- jvanderbot 5y ago
  I believe it is right to provide recommendations against non-profits that hold significant assets in investments. I don't think it should be illegal or anything, but I do think that potential donors should be cautioned about this. Most people have the expectation that they are donating to fix a problem or keep an organization running, not increase the returns on investments. If a non-profit has a long-term strategy, that should probably involve setting up _other_ institutions that can self-sustain, rather than "We'll get rich first". The _problem_ is that this translates to some expectation that every dollar given should go immediately to purchasing something, and that somehow it's "more effective" for a person to go purchase things than to donate to, say, red cross. That's dead, dead wrong. Give money, let them invest in solutions. However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.
vmception 5y ago
yeah that's probably true, I guess the reality is that I wasn't looking at ones accepting stock, but physical art and crypto. Some do and that number is growing by orders of magnitude each year because its now the 2020s, but many think it's still the year 1997. It is surprising how low tech that entire sector is. It seems to be a recurring story for new entrants to the non profit space to be the "tech savvy one doing things differently", because the whole space is, I guess, not market driven as it isn't motivated by being technologically aware. Only getting a few recurring donors and doing their mission.
- jvanderbot 5y ago
  In each case, it is liquidated and used as cache. Some of the skill of the best philanthropy folks is in finding ways to offload these wonky donations that donors think are useful. However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.

PragmaticPulp 5y ago

> From my dabblings in the non profit space, I'm finding many are unprepared to accept anything aside from cash. If you’re donating huge amounts of money, you have lawyers to help those companies figure it out. If you’re a small-time donor, trying to saddle a tiny non-profit with all of the extra hassle and legwork of accepting appreciated shares just so they can take your one-off donation is counter-productive (unless they're already set up for this, obviously). They might end up spending more time and money figuring out how to deal with your single donation than they would gain from accepting it, which is why they don’t bother. The solution is easy, though: Set up a “Donor Advised Fund” through any number of major brokerages. They will handle the liquidation of your shares and mail a check to the charities you choose. Couldn’t be easier for both you and the charity.

fsckboy 5y ago
> all of the extra hassle and legwork of accepting appreciated shares just so they can take your one-off donation is counter-productive going to etrade.com and opening an account, followed up by mailing proof of being a nonprofit? It's as easy as that, I ask charities to do it all the time.

chadash 5y ago

Here's a tip that pretty much every philanthropist out there knows, but would probably be helpful to the HN crowd. If you donate appreciated stock, you get a "double" tax break, since you don't pay capital gains tax and you also can deduct the donation amount. For example, you have $1000 of tesla shares that you bought for $100 a few years ago. You want to donate some money to charity now. If you sold those shares and put them in your bank account and then donate cash, you'd owe capital gains tax (15 or 20% depending on tax bracket) on the $900 gain. So if you donated all of your Amazon stock that way, you would give a donation of $1000 - (900 x 0.15) = $865 and you can take an $865 tax deduction if you itemize. Alternatively, you can donate $1000 of appreciated tesla shares directly to a charity. Now, you don't owe capital gains, AND you can take a $1000 tax deduction. Double win. Rich people who give to charity are well aware of this loophole. For them, it pretty much never makes sense to donate cash if they have appreciated assets they can give instead (at the very least you might as well donate the stock and then buy it back later at a higher cost basis, although I think there might be rules about buying the exact stock again within 30 days). And in my experience, most charities are happy to take stock for this reason... because their major donors only want to give stock, so they already have the infrastructure in place for accepting it.*

vmception 5y ago
That’s literally what i wrote in 1000 less words
deleted 5y ago
[deleted]