Guide to Donating Stocks, Securities and Mutual Funds

“I wish I could do more.” These are words we sometimes hear from our donors and maybe you’ve had this thought. You want to see more impact, fund more innovation, and help more Albertans.

Donating stock or other marketable securities that have increased in value is an opportunity to make a significant impact for Albertans facing cancer while reducing your tax owing. A gift of securities to the Alberta Cancer Foundation can eliminate steep capital gains tax that you would incur if you were to sell these assets and donate the profits. By eliminating capital gains tax and utilizing the tax credits you receive with your charitable donation receipt, gifting securities is the most tax-efficient way to give.

By giving strategically, perhaps you can do more. Financial Advisor Ross Young from ICP Planning Ltd. says transferring publicly-traded, appreciated securities instead of cashing them in to make your gift can save you significantly in taxes. Quite simply, it’s a more tax-efficient and strategic way to give.

Alberta Cancer Foundation board member, Rory Tyler has been donating via securities for years. His most recent being a generous donation to the Kvisle Fund for Glioblastoma which supports glioblastoma multiforme brain cancer research initiatives at the Tom Baker Cancer Centre in Calgary.

“To me, it’s a great way to try to optimize your donation, you get the benefit of not only giving to the cause and getting a tax deduction for your donation but you are also able to shelter any capital gains associated with the gift of securities”.

“For individuals that have held stocks in their portfolio and are thinking ‘How can I optimize my giving?’ it’s much better to give a security, than to say, sell a stock, incur the capital gain and donate the proceeds. It’s an approach that the government has put in place to enable you to use some tax planning to optimize your charitable donations”.

“And the process is reasonably straightforward, you simply fill out a form on the website and then work with your broker confirming the details and that’s pretty much all there is to it! It truly is a tax-effective approach for anybody who has stocks in their portfolio that have appreciated over time,” says Rory.

Since 2016, Rory has taken pride in supporting the Alberta Cancer Foundation both professionally and personally. “Cancer touches virtually everybody in the province in one way or another, the Foundation covers all aspects of cancer across the entire province, so to be able to support that is important. And like all families, we have had our own touchpoints with cancer, so giving back to the cause is personally important as well,” he says.

Giving More by Giving Securities

Let’s look at an example. Say you want to fund one of the most promising new cancer treatments around, an innovative immunotherapy clinical trial on CAR T-cell therapy. You are fortunate to have invested in Amazon years ago for $5,000. Today, your same shares are worth $50,000, and so you want to make a donation of this amount.

Sell securities for cash. Donate proceeds
Donate Security “in-kind”
Current Market Value

$50,000

$50,000

 
Original cost

$5,000

$5,000

 
Capital Gain

$45,000

$45,000

 
Taxable Capital Gain (50% of gain)

$22,500

$0

 
Tax on Capital Gain

$10,8001

$0

 

Donation Amount After-tax

$39,2002

$50,000

Alberta Cancer Foundation gets $10,800 more!

Your tax credit from charitable donation

$19,5503

$24,9503

Your charitable tax credit is $5,400 more!

1 This assumes the highest Alberta federal and provincial combined tax rate of 48%. For calculating capital gains tax, this rate is applied to 50% of the capital gain.

2 $8,800 represents current market value of $10,000 minus estimated tax of $1200.

3 In Alberta, the combined provincial and federal tax credit is 25% on the first $200 donated, 50% for every dollar above the first $200

In this example, by transferring the securities instead of cashing them in to make your gift, you can make a $10,800 bigger difference, donating the full $50,000 you wanted to give, which would get you ­$5,400 more back in your charitable tax credit.

Giving securities is possible for any gift amount as long as the security is publicly-traded, and provides maximum tax savings as long as it has appreciated.

Securities or Cash?

We encourage you to speak to your own financial advisor about your personal situation as everyone is different, and the global pandemic has affected the market in different ways.

Mr. Young says the TSX was down approximately 22% from January 1st to the end of March. Thankfully, many investments have nearly recovered, and certain industries (teleconferencing and home delivery to name just two) have fared extremely well. However, the future continues to remain uncertain and unprecedented.

How to do it?

Giving securities is quite simple. Just download the Security Transfer Package on our website, read through the three simple steps for transferring stocks or mutual funds and fill out the letter of authorization from donor to broker. To assist you further, we’ve provided some responses to some frequently asked questions. For a 2020 tax receipt, please be sure to submit the form by December 15 to ensure enough time for the security transfer to take place in the market.

Learn more about donating securities. 

Should you have any questions or wish to learn more, please contact:

Christy Soholt

Legacy and Gift Planning Manager
Alberta Cancer Foundation
Direct: 780-643-4563
Toll-free: 1-866-412-4222
Email: Christy.soholt@albertacancer.ca