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Can a Robo Advisor Select the Most Advantageous Stocks for You to Donate to Charities?

Which Stocks are the Best to Donate?

By Andrew Rombach, a Content Associate for Lendedu – a website that helps investors, consumers, small business owners, and more with their finances

When most people think of making charitable contributions, activities like volunteering, donating gently-used household or clothing items, or writing a check at a fundraiser come to mind. However, donating stock to charity is another way to make an impact. The process of giving stock to a non-profit organization is similar to that of any other contribution of stock investments, but this type of donation may provide tax benefits to you as the donor.

While the benefits of charitable stock donations may be enticing, keep in mind that you can only make a donation if you own stocks in the first place. You need to select and invest in a stock before you can even consider any benefit from a donation; it can be difficult to make the right buy, especially if you’re new to investing.

Luckily, beginner and experienced investors have two main options for investment advice. Alongside traditional human advice, robo-advisors are a growing resource for portfolio management thanks to advances in technology. This begs the question: which advisor should you rely on? How do up-and-coming robo-advisors stack up compared to traditional advisors?

What Are the Advantages of Using a Robo-Advisor?

Robo-advisors are a relatively new addition to the investing marketplace. Through technology-driven platforms, robo-advisors help individuals invest their money in a variety of investment vehicles, often automatically. Investment options currently include mutual funds, exchange-traded funds, and individual stocks. Through a mobile app or an online website, robo-investors can add money periodically or systematically to an account, and the funds are immediately invested.

One of the most significant benefits of using a robo-advisor is the lower barrier to entry. Robo-advisors are designed to help novice investors get started with building a portfolio. They often only require small contributions to start, reducing the upfront commitment. This provides access to stocks in smaller increments, with lower dollar amounts necessary, giving investors the ability to build up a stock portfolio over time that can ultimately be donated to charity.

Robo-advisors may be less expensive than traditional brokerage accounts or investment advisors. There are minimal fees when using a robo-advisor, which can be beneficial when trying to invest for a future donation. Lower fees may benefit an investor by reducing the overall cost of investing and increasing the final profit margin.

Aside from reduced cost, robo-advisors offer live data and instant updates on stock performance, allowing an investor to keep tabs on their money. This could help an investor make faster decisions and react more quickly to the market if needed. Furthermore, robo-advisors will offer suggestions based on your individual risk tolerance and preferences which could be instrumental for a new investor still learning the ropes.

Are They Trustworthy Compared to Traditional Advisors?

Although robo-advisors can be less expensive and easier to work with on the surface, investors have another option for building up a stock portfolio with the help of a traditional financial advisor. Human advisors are the preferred choice for some millennial investors according to a recent study, given the higher level of engagement, knowledge, and experience they bring to the table.

To start, traditional investment advice is typically more expensive compared to a robo-advisor. Selling points for robo-advisors are the low account minimums and fees. Contrarily, some traditional advisors may charge higher fees and only work with clients who are investing larger sums.

Although fees and account minimums are higher, human advisors bring a wealth of experience to the table as well as the human touch. They can see possibilities and developments that a robot may not always catch. Some would argue that human advisors can extract a greater return from your investments, whereas a robo-advisor may offer more limited investment options.

However, others still argue that robo-advisors are able to generate the same or better investment performance as fee-heavy financing advisors over the long run, but this may not be completely accurate yet. The current short track record of robo-advisors may not be comparable to financial advisors.

Additionally, human advisors can add much more in terms of forward-thinking and strategic planning. Financial advisors can tailor a portfolio for the purpose of donating stocks in the future, while robo-advisors may not be able to factor in this intention.

The Bottom Line

Donating appreciated stock can be a smart move from a tax perspective – not to mention an incredibly valuable contribution to a charitable organization. Donating investors pay a greatly reduced capital gains tax on the transaction while the charity reaps the benefits of an asset it can use later on.

Robo-advisors offer the ability to invest without high or unrealistic account minimums, like some financial advisors require. They can also offer stock investing on the cheap, compared to the fees charged by human advisors. However, these benefits do come with trade-offs as mentioned. On the other hand, traditional advisors offer strategic advantages, but at a cost. An investor needs to weigh those costs and advantages with the expected growth of their investments.

With that in mind, beginner investors may want to start with robo-advisors to build up a portfolio, then transition  to a human advisor for the long term before donating to charity.

How to fundraise by accepting stock donations.

Average increase in funds by accepting stock donations:
Dramatically increase your contributions before the end of the calendar year...
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If you learn to ask for gifts from appreciated assets you’ll repeatedly GET more generous DONATIONS.

Dr. Russell James J.D., Ph.D., CFP®, professor in the Department of Personal Financial Planning at Texas Tech University completed a study reporting on data from 1 million NPO tax returns from 2010 – 2017.


This included IRS-released data from e-filed returns of more than 200,000 nonprofit organizations.

The following are the conclusions from his study:

  1. Non Profits that received only cash gifts  had only 11% growth. 
  2. Non Profits that constantly received non-cash gift had closer to 50% growth. 
  3. Non Profits that received stocks and securities had closer to 66% growth.

A 55% difference in growth between accepting just cash and accepting securities.

Per the research:

  • People are more likely to spend irregular, unearned gains (e.g., capital gains on appreciated assets) on luxury goods (O’Curry 1999) and philanthropy in particular (Reinstein & Reiner, 2012; Konow, 2010) than they are regular, earned income.
  • Framing a donation as an exceptional event removes it from comparison with regular disposable income budget items and increases giving (Sussman, Sharma & Alter, 2015).
Open an account today. /open-new-account

Procedure for Charities to Accept Stock Donations Online


Authorize a representative to open an account

Have a meeting with board members of the charity to discuss your options and who will be the person opening the account.

Open an account

You can open an account online in minutes

Wait for verification

Wait 24 hours for your account to be verified.

Provide your donors with your custom stock donation page or give them a non-automated form

You can download your link t o your stock donation page from your account page after signing in.

Wait for your checks

Once the donor initiates a transfer you sit back and wait for us to process the donation and then you will get a check or wire transfer for the proceeds when the donation clears.

Making it easier to give Stock Donations.

Finding the right forms and dealing with your broker can be such a hassle.

Stock Donator benefits:

* Receive email updates on the status of your donation.
* Get a receipt with the average value of your donation emailed to you.
* Donors can make a donation with or without creating an account.
* Make multiple donations without having to refill forms when you create an account.
* Keeps a history of all donations made.
* Keeps a history of all receipts issued making taxes a breeze.

How the stock donation process works

How to Make A Donation From a Non-Supported Brokerage Firm

  1. Create a donor account on our site (from, go to “For Donors> Create Donor Account” on the top right of the page)
  2.  Once your account is created, you’ll be re-directed to your account home page
  3. From your account home page, in the “Donate Now” tab, you can initiate your donation request by entering the stock, quantity, and selecting your indented recipient from the drop down list.
  4. On the next page, you’ll be asked to provide your brokerage information.  Here, select “*Other Brokerage” in the Brokerage Firm field.  Go ahead and complete the rest of the information as required.
  5. On the final confirmation page, scroll towards the bottom.  You’ll be provided an option to either (i) print the generated form, sign, and send to your brokerage firm, or (ii) sign electronically using the provided signature pad and submit to Stock Donator to send on to your brokerage firm.  Completely your preference on which way to go…
  6. Once submitted, you’ll have the opportunity to print the generated form (you’ll also receive it via email).  The form will have the destination brokerage firm, DTC number, account number populated, along with the pertinent details of your donation request.

Investors Move to Tax Safehavens

A recent article by the New York Times linked to below says that many investors are looking for ways to reduce their tax profiles by moving income to current years and selling stocks that have locked in capital gains.  Instead of selling those stocks, and investor looking to limit his tax profile might wan to consider donating the same stock to a non profit organization.  As a matter of fact, if tax rates for capital gains do go up, then stock donations become even better tax savings vehicles.  Instead of selling the stocks and paying capital gains, one can donate the stock and avoid capital gains tax altogether!  Of course, you would have had to hold the stock for over a year and other tax restrictions might apply (ask your CPA).

Overall, investing in stocks is a nice way to increase your wealth.  Donating those stocks is a nice way to avoid paying heavy capital gains taxes come year end.

What are the IRS rules for making a Stock Donation?

Here are the IRS rules for making a Stock Donation:


Select a qualified recipient.

If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.

Itemize deduction and fill out Form 8283

To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all non-cash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.

Deduct any benefits

If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.

Compute the market value of the stocks donated

Donations of stock or other non-cash property are usually valued at the fair market value of the property. There are special rules for determining fair market value of stocks (see post title IRS rule 561). StockDonator computes this value for you.

Maintain records

Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given. Stock Donator maintains these records for you if you maintain a stock donator account. To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. Stock Donator maintains these records for you if you maintain a stock donator account.

Qualified Appraiser not needed for stock donations

Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser. This rule does not apply to Stock Donations.
How IRS Publication 561 works for Stock Donations

Stock Donations made to a non profit organization (501(c)3) can significantly reduce the amount of tax you pay.

Donating stocks or other non-cash gifts allows you to legally evade paying income tax on the amount donated and capital gains tax on any appreciated value of the shares donated resulting in significant tax savings to you.

Stock Donations For Smaller Non-Profits

Many larger non profit organization have been accepting stock donations for many years.  Nancy Munger  donated 25 shares of Berkshire Hathaway stock  to the Henry E. Huntington Library and Art Gallery. The dollar value of the donation is close to $3 million. (see article).  Warren Buffett also chooses stock donations as his favorite method of donation and recently donated $42 Million to charities via stock donations.

But what about the smaller organizations?  They don’t have the necessary infrastructure to be able to accept stock donations.  Until now.  Stock Donator levels the playing field.  Now smaller non-profits can accept stock donations online without having to worry about the process involved in opening a brokerage account, checking the brokerage account, account maintenance fees, and worrying about donation receipts.  A stock donation can be processed by Stock Donator and the organization receives one check.

Sign up today.

Stock Donations Reached $23.7 Billion!

Of all non-cash contributions made, Stock Donations represented the largest category of noncash donations at $23.7 billion or 44.9 % of all non-cash contributions.

Over 450,824 stock donations were made to non-profits in one year!  With such a large number of stock donations and such a large amount, each Non-profit should do more to accept stock donation.  Stock Donator is the number one way to donate stock online.  Apply for an organization account today!

Source: Internal Revenue Service, Statistics of Income Bulletin, Spring 2010

Non Cash Contributions

The recently published IRS Spring 2010 Statistics of Income Bulletin provides insight into noncash giving by donation type, donor age and income for tax year 2007. More than 6.9 million tax returns reported $52.8 billion in noncash charitable donations. Of the roughly 18.6 million noncash donations that were reported:

Individual Noncash Charitable Contributions, 2007

(Money amounts are in the thousands of dollars)

Type of Donation

Number of Donations


All donations



Corporate stock



Mutual funds



Other investments



Real estate






Conservation Easement



Façade Easement



Art and collectibles















Household items






Other Vehicles






Airline tickets/miles






Source: Internal Revenue Service, Statistics of Income Bulletin, Spring 2010