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Most Americans Not Aware of Advantages of Giving Securities

(Nov. 12, 2007) A new report shows that American donors could realize $4.5 billion in additional tax savings if they gave appreciated securities instead of cash, but most are not aware of the tax advantages.

According to Smart Giving: Maximizing Your Charitable Dollars Through Donations of Appreciated Stocks and Mutual Funds, published by Fidelity Investments, almost three-quarters of all contributions made by individuals in 2004 were in the form of cash.

However, a random sample of 50,000 Fidelity customer households with at least $25,000 in securities found that 90 percent of them could have donated $10,000 entirely in securities with long-term appreciation. Those households would have realized an additional $449 in federal tax savings above and beyond the tax savings made from just making the contribution. In addition, there could have been additional savings from state and local taxes since donating appreciated securities may help avoid them as well.

Tax Advantages Not Well Known

While many households may have the resources to donate such gifts, 68 percent of respondents to a Fidelity survey were not aware of the additional tax advantages they would receive by make gifts of appreciated securities. More than half (54 percent) could not identify any additional advantages, even when the benefit of reduced capital gains tax was offered as a response option. Nearly 40 percent said they did not want to give up high-performing securities (the report notes they can be immediately repurchased), and 23 percent cited too much paperwork.

Just 5 percent of respondents indicated having made a donation of appreciated securities to charities over the past three years. Even among respondents who gave more than $5,000 in 2006, just 17 percent reported donating securities to charity.

Donor-Advised Funds

The survey also asked respondents about their knowledge of donor-advised funds. Eighty-six percent had either not heard of donor-advised funds or knew little about them. Only 3 percent reported giving to or using a donor-advised fund.

Gifts to charities with donor-advised fund programs accounted for just $6 billion of the almost $300 billion in charitable contributions in the United States in 2006, according to the report.

About the Report and Survey

The survey used in Fidelity’s report consisted of 500 households with at least $100,000 in investable assets that had reported donating $1,000 or more to charity at least once in the past three years. The survey was conducted online on Sept. 11–13, 2007, by Richard Day Research.

The full report is available on the Fidelity website.

Fidelity Investments is one of the world’s largest providers of financial services, with custodied assets of $3.3 trillion, including managed assets of more than $1.5 trillion as of Sept. 30, 2007. Fidelity offers investment management, retirement planning, brokerage, band human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms.

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