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Donating Stock Online

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:
55
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

1

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.
2

Open an account

You can open an account online in minutes
3

Wait for verification

Wait 24 hours for your account to be verified.
4

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.
5

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.

Get ready for December!

Stock Donations peak around December.  Non-profit organizations that are looking to get a leg up on receiving fundraising dollars should be looking to prepare for receiving stock donations starting now!  The process is very simple with Stock Donator.  Open an account online for free and you can be ready to receive stock donations within 24 hours after going through our approval process.

As December is nearing, make sure you are doing everything you can for your non-profit or 501(c)3 which includes preparing for a flood of incoming Stock Donations with Stock Donator.

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 www.stockdonator.com, 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.

New Years Resolution – Get more stock donations to your charity!

With the recent economic slow down, donations to charities has also suffered.  Many non-profits need to re-think their fundraising efforts.   Donors are looking for ways to get the most bang for their buck!

Many organizations are advertising and receiving stock donations as Donors are recognizing the significant tax advantage to donating stock. As the market rebounds, more people will have appreciated stock and will desire the ability to donate those  securities.

IS YOUR ORGANIZATION READY TO CATCH THIS NEW WAVE OF DONATIONS?

Sign up for a Stock Donator account today to start receiving stock donations in the easiest way possible.

Happy New Year From The StockDonator Team

We wish all our partner organizations a happy and healthy new year, full of success and new stock donations!

You can be a hero to your donors this year by offering a tax break and receiving a valuable donation.  Don’t forget to send out a link to your donors, letting them know about the significant tax advantages of donating stock and point them to your free cross-branded stock donator donation page.

Warm wishes,

The Stock Donator Team.

Open a Brokerage Account or Stock Donator?

During the holiday season, many organizations, especially 501(c)3’s are looking for ways to increase revenue.  One of the easiest ways to increase revenues is to allow your donor multiple ways of donating money.

One of the most popular non-cash donations is a donation of Stock.  Traditionally 501(c)3 can accept stock donations only by opening a brokerage account with one of the big brokerage firms.  They usually face the problem of running out of time before year end to do so, or, if they had the foresight to open an account in time, they run into logistical problems with the brokerage firm they have chosen or with their donor’s brokerage firm.

Instead of opening a brokerage account, non-profits have the option of opening an account with Stock Donator.  The process can be done online and takes only 1 day to verify.  Once the Stock Donator account is open, the Donor will be able to donate stock to the 501(c)3 quickly and easily through the organization’s cross branded website.

Now, when a donor calls and asks if you have the capability to accept stock donations, you can happily say “YES!”  Thanks to Stock Donator you no longer need to open a brokerage account.  Simply point your donor to www.stockdonator.com and they will be able to donate stock to your non-profit quickly, securely and easily.