Charitable Giving for Founders: DAFs, CRTs, and Pre-IPO Stock Donations
Written by Aparna Devalla, CPA
Curated by Rubric Financial
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Why Stock Donations Beat Cash Donations
- Donating $1M of APPRECIATED STOCK that you bought for $10K: deduct $1M from current-year income (full FMV), and avoid the $990K capital gain you would have realized on sale.
- Effective tax savings vs. cash donation: ~40% federal + state. A $1M stock donation produces ~$400K of tax benefit; a $1M cash donation produces ~$370K.
- The math gets larger with bigger donations. A $10M stock donation can produce $4M of tax savings, turning a $10M philanthropic gift into a $6M net cost to the founder.
- Must be LONG-TERM CAPITAL GAIN stock (held >1 year) for the FULL FMV deduction. Short-term gain stock gets only basis-amount deduction.
Go deeper on this topic: On Rubric Financial (our sister practice for personal tax planning): Opportunity Zones: Capital Gain Deferral and Tax-Free Growth→
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