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Donors often choose to make their gifts to Junior Achievement in forms other than cash. Examples include:
- Securities (stocks, bonds, mutual funds)
- Real estate
- Retirement plans
- Life insurance policies
- Other items of value (jewelry, paintings, collections, antiques, automobiles, etc.)
After considering the properties you own, you may find giving something other than cash to be an appealing alternative. Giving non-cash property enables you to make a meaningful gift while conserving cash for other uses and enjoying what may be greater tax savings than those provided by gifts of cash.
Giving Appreciated Property
If you have non-cash property, such as stocks and mutual funds, that has grown in value (appreciated) and been held long-term (more than one year), you can generally enjoy greater tax savings from giving such property to Junior Achievement than from giving an equivalent amount of cash. That's because a gift of appreciated property lets you bypass capital gain tax that could be due if you sold the asset. You are also entitled to a charitable deduction based on the property's current value, including the "paper profits" you have earned since you have owned it.
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For example: Barbara is in the highest federal income tax bracket. She wants to make a $5,000 gift to Junior Achievement this year. Should she give stocks, bonds, or mutual funds worth that amount, or should she sell them and give the cash from the sale?
If she gives $5,000 cash, she'll receive a deduction for $5,000, saving her $1,750 in taxes. If she gives stock valued at $5,000 that was purchased years ago for $1,000, she will achieve the following results:
- A charitable income tax deduction for $5,000, saving her $1,750 in taxes (just like a cash gift), plus
- Avoidance of capital gains tax on the $4,000 increase in value, a $600 savings (15% capital gain tax rate x $4,000)
All told, the after-tax cost of Barbara's gift of stock worth $5,000 is just $2,650. Comparing that to the $3,250 after-tax cost of giving cash, she decides to give the stock and thus make the same gift to Junior Achievement at a savings of almost 20% over the after-tax cost of the same gift in the form of cash.
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