Middlebury

Making a Gift of Appreciated Securities

 

When you make a gift of appreciated securities to Middlebury, you'll often receive a significant tax benefit in the year you make the donation and avoid the capital gains tax you would have to pay if you sold the securities.

These tax savings mean that you can give more to Middlebury with a gift of appreciated securities instead of cash, while the cost to you remains the same.

Download stock transfer instructions.
Download Stock Power Form.

 

How It Works
  • You transfer securities you've held for more than year to Middlebury. (Transferring the stock, rather than selling it yourself and giving the College the proceeds, is necessary to avoid capital gains tax.)
  • You receive gift credit and tax breaks.

Middlebury sells your securities and uses the proceeds for its programs.

Benefits
  • You get an immediate income tax deduction for the fair market value of the securities on the date of transfer, no matter what you originally paid for them.
  • You pay no capital gains tax on the securities you donate.
  • You avoid a broker's sales commission on the sale.
  • You can direct your gift to a specific fund or purpose.
  • You have the satisfaction of making a significant gift now or funding a life-income gift that benefits Middlebury later.
Example (assuming a tax bracket of 33% and capital gains tax of 15%)

Mary makes a gift of stock currently valued at $10,000. The cost basis for the stock is $5,000. Mary saves $3,300 on income tax and an additional $750 in capital gains tax.

If you hold your stock in certificate form?

  1. By certified mail, return receipt requested, send unendorsed certificate to Cheryl LeBlanc, Treasury Analyst, Service Building, Middlebury College, Middlebury, VT 05753.
  2. In a separate first class envelope, send to the same address a stock power form for each certificate, signed exactly as your name appears on the security but otherwise left completely blank.
  3. Include a signed letter of instruction specifying the number of shares being transferred and the gift designation. For example, "100 shares of XYC Corporation to the Middlebury College Annual Fund." If your gift is to be for less than the total number of shares listed on the certificate, include your social security so a new certificate with the remaining shares can be issued.
  4. The value of your gift will be the average of the high and low quotations using the later of the postmarked date from the stock certificate of the stock power form.

Making a Gift of Securities

More and more alumni and friends donate securities to Middlebury each year. Securities such as stocks, bonds and mutual funds make a wonderful gift, and the procedure for donating them is simple. Best of all, the tax savings to the donor can be significant. Here's why:

Selling securities or mutual funds that have appreciated in value generally will result in long-term capital gains tax being due if the securities have been owned for more than 12 months.

Making a gift of long-term appreciated securities or mutual funds to Middlebury AVOIDS THE CAPITAL GAINS TAX.

In addition, the gift allows the donor who itemizes deductions to take an INCOME TAX CHARITABLE DEDUCTION for the full fair market value of the securities, up to 30% of adjusted gross income.

How do I make a Gift of Securities?

More and more alumni and friends donate securities to Middlebury each year. Securities such as stocks, bonds and mutual funds make a wonderful gift, and the procedure for donating them is simple. Best of all, the tax savings to the donor can be significant. Here's why:

Selling securities or mutual funds that have appreciated in value generally will result in long-term capital gains tax being due if the securities have been owned for more than 12 months.

Making a gift of long-term appreciated securities or mutual funds to Middlebury AVOIDS THE CAPITAL GAINS TAX.

In addition, the gift allows the donor who itemizes deductions to take an INCOME TAX CHARITABLE DEDUCTION for the full fair market value of the securities, up to 30% of adjusted gross income.

If your broker (or bank) holds your stock shares or mutual fund shares, you may request that they be transferred directly to Middlebury via electronic transfer of DTC:

  1. Telephone or e-mail Cheryl LeBlanc, 802-443-5372, and he will expedite transfers with you and your broker or banker.
  2. The effective date of your gift will be the date the stock of mutual fund shares arrive in Middlebury's account, and the value of your gift will be the average of the high and low quotations for that day (in the case of stock) or the value at the end of that day (for mutual fund shares).
  3. Stock transfers normally are completed in two to three business days, depending upon your broker. Mutual fund transfers often take three to four weeks, especially at year-end, due to additional paperwork required to complete the transfer.

What are the benefits of these types of gifts?

  1. Greater tax benefits than equivalent cash gift
  2. Income tax charitable deduction if you itemize deductions
  3. Avoidance of capital gains tax on the appreciated securities or mutual fund shares donated
  4. Avoidance of broker's sales commission

For more information about making gifts of securities or mutual funds, please contact us.

The price of particular stocks fluctuates widely. How will you value my gift?

The College takes the average of the high and low prices for the stock on the date it is received by the College. If the high price was $50 and the low was $40 on the day you made your gift, your gift will be valued at $45 per share.

If the stock you donate is held by your broker, the effective date of your gift will be the date the stock or mutual fund shares arrive in Middlebury's account. If you hold the certificates yourself and mail them to us using the US Postal Service, the gift date is the postmark date on the envelope.  If using overnight mail, the date of gift is the date it is received by the College.

Donors of mutual fund shares use the fund's closing price on the day the shares are received into our account.

What if my broker or bank holds my stock shares or mutual fund shares?

1. Inform your broker in writing that you wish to give appreciated securities to Middlebury College. Be sure to let the broker know when you'd like the transfer made.

2. Telephone or e-mail Cheryl LeBlanc, 802-443-5372, and he will expedite transfers with you and your broker or banker.

3. The effective date of your gift will be the date the stock or mutual fund shares arrive in Middlebury's account, and the value of your gift will be the average of the high and low price quotations for that day (in the case of stock) or the value at the end of that day (for mutual fund shares).

4. Stock transfers normally are completed in two to three business days, depending upon your broker. Mutual fund transfers often take three to four weeks, especially at year-end, due to additional paperwork required to complete the transfer.

What do I do if I hold the stock in certificate form?

If you hold the actual stock certificates, you will need to sign a stock power form for each certificate you contribute. You may obtain a stock power from any broker or financial institution. Then follow the directions below.

1. By certified mail, return receipt requested, send unendorsed certificate to Cheryl LeBlanc, Treasury Analyst, Service Building, Middlebury College, Middlebury, VT 05753.

2. In a separate first-class envelope, send to the same address a stock power form for each certificate, signed exactly as your name appears on the security but otherwise left completely blank.

3. Include a signed letter of instruction specifying the number of shares being transferred and the gift designation. For example, "100 shares of XYC Corporation to the Middlebury College Annual Fund." If your gift is to be for less than the total number of shares listed on the certificate, include your Social Security number so a new certificate can be issued for the remaining shares.

4. The value of your gift will be the average of the high and low quotations for the stock on the postmarked date for the stock certificate or the stock power form, whichever is later.

How can I use my appreciated stock to increase my yearly income and benefit Middlebury?

You can receive income for life and all the benefits of donating appreciated securities by using the securities to fund a life-income gift, such as a charitable gift annuity. You'll pay no upfront capital gains tax on the transfer and will receive lifetime payments from your gift plan that equal or surpass the dividends the securities are paying now.

How do I make a gift of securities?

The first step is to consult your financial adviser. Then let Middlebury know that you plan to make the gift by calling or e-mailing  Cheryl LeBlanc, 802-443-5372.

There are different protocols for giving securities, depending on whether you hold the stock certificates or your broker does. Please review the FAQ that relates to your particular situation.

How do I know if a gift of securities is right for me?

  • You're holding stocks, bonds, or mutual fund shares that have risen in value.
  • You want to maximize your deduction but not incur capital gains tax.
  • You want to make either an outright gift to the College or a gift that will return lifetime payments to you

This kind of gift would not be right for you if your stock has declined in value. In that case, the fair market deduction rule would work against you, since your deduction would be limited to the current value. For example, if you bought stock for $20,000 and it is now worth $10,000, your charitable deduction would be limited to $10,000. Nor will the IRS allow you to take a capital loss by transferring the stock to the College.