Publicly Traded Securities
Donating appreciated securities often allows donors to make a bigger philanthropic impact and enjoy greater tax advantages than donating cash or selling the stock and donating the proceeds. The Wichita Community Foundation offers expertise in even the most complicated charitable transactions, from publicly traded securities to shares in S corps or privately held securities. By donating appreciated securities, you bypass capital gains tax and may deduct the fair market value of your gift.

A gift of publicly traded stock, bonds and mutual funds can be used to establish or add to a fund. Appreciated securities held long-term often provide important tax advantages, as their full market value is generally deductible as a charitable contribution up to 30 percent of the donor’s adjusted gross income. Like gifts of cash, deduction amounts that exceed the limit can be carried forward for up to five additional years.

For publicly traded securities held for more than one year, the deduction is the mean of the high and low prices reported on the date the contribution is received by the Wichita Community Foundation. For mutual fund shares held for more than one year, the deduction is the closing price on the date the contribution is received. For securities or mutual fund shares held for one year or less, the deduction is the lesser of the cost basis or fair market value.
Securities can be gifted in two ways:

Electronic Transfer: Securities that are held by a broker may be delivered by wire through the Wichita Community Foundation’s custodial account at US Bank. Please contact Justin Healy or Carol Nazar to obtain instructions for electronic transfer. You will need to provide WCF with the following information to make the transfer: your name and contact information; broker’s name, firm and contact information; name of stock and number of shares being transferred; approximate date of transfer. The stock or mutual fund will be sold as soon as possible after receiving the gift and an acknowledgment for tax purposes will be mailed to the donor.

Transfer of Paper Securities Held in the Donor’s Name: Donors holding paper stock certificates will need to complete the transfer instructions on the reverse side of the certificate in order to gift them to a Foundation fund. Please sign your name exactly as it appears on the face of the certificate. WCF requires a signed stock power form and letter of authorization which you can obtain by calling or emailing our office. Once these have been completed, please bring them to our office at 301 N. Main, Suite 100 along with your stock certificates.

Closely Held Securities
Closely-held stock, S-Corp stock, interests in limited liability companies and many types of partnership interests can also be gifted. As with publicly traded securities, the donor is able to deduct up to 30 percent of the donor’s adjusted gross income based on the fair market value of the stock. These types of gifts are somewhat more complicated because the security interests are often subject to restrictions imposed by the business entity, and because valuation of these closely-held interests is not as readily apparent as with publicly-traded securities. The donor will be required to provide the IRS with a qualified appraisal for any contributed property for which the donor will claim a deduction of more than $5,000. For securities held for one year or less, the deduction is the lesser of the cost basis or fair market value. We encourage you to contact us to discuss a gift of closely held interests, and work with a qualified professional to craft this type of gift.

For those whose need for life insurance has decreased, making a gift of an unneeded policy can be a convenient and effective way to meet charitable goals. Life insurance often allows a prospective donor to make a significantly larger charitable gift than might be possible using their current assets.

Transferring ownership of a cash value policy to WCF makes the donor eligible for a charitable tax deduction based on its current value. Estate taxes are also reduced since the value of the policy is removed from the donor’s estate. A donor can make life insurance part of his or her estate planning by naming the Wichita Community Foundation as a partial and/or contingent beneficiary of any insurance policy’s death benefit.

By making the Foundation beneficiary of the life insurance contract, the donor can take a deduction for the ongoing premium payments. Either cash or publicly traded securities may be used to make premium payments. Or if they prefer, a donor can also receive tax benefits if he or she make a gift of a paid-up life insurance contract. Alternatively, the donor can remain the owner of a contract and name the Foundation as partial, sole or contingent beneficiary of the life insurance death benefit. No income tax deduction will result, but the gift will create a charitable deduction for the donor’s estate.

Donating art, antiques and other collectible objects to Wichita Community Foundation may provide your clients with the following possible benefits:
• An immediate income tax deduction
• Avoidance of the tax on capital gains on appreciated assets
• An estate and gift tax deduction
• The creation of a lasting legacy with the Wichita Community Foundation.

Your clients generally will receive a higher income tax deduction if they donate an art object or collection that has appreciated in value over the time they have owned it. Art objects and collections held more than one year are capital gain property. Generally, property is capital gain property if its sale at fair market value on the date of the contribution would have resulted in long-term capital gain. Capital gain property includes capital assets held more than one year. The general rule is that a client can usually deduct the full fair market value of the donation as of the date of the contribution.

In order to maximize your client’s charitable deduction benefits, (a deduction of the full fair market value), the qualified organization must be a public, not private, charitable organization. The Wichita Community Foundation is a public charity.

Prospective donors should also be aware the Pension Protection Act of 2006 increased the requirements of a qualified appraiser in charitable contributions of personal property such as art and collectibles. Equally, it is important to make sure your client understands that the Wichita Community Foundation typically sells art, antiques and collectibles in order to fund its charitable mission in the community of Wichita. The donor can direct the proceeds of the sale be used for a specific purpose upon the sale and is encouraged to talk with the Foundation staff concerning his or her gift as laws governing these types of gifts are highly subject to change.

For more information, please contact us.