How a Retroactive Capital Gains Tax Hike Can Impact Nonprofits

The Presidential Administration made a huge splash earlier this year when announcing that the “American Families Plan” would be funded in part by the largest-ever increase on the capital gains tax. Additional ripples were felt last week when the Treasury Department announced that they intend to implement the tax hike retroactively from April 28, the date it was officially announced. This decision was made to avoid a dramatic sell-off window that could negatively impact the markets.  

According to some Washington policy experts, the President’s tax plan will likely pass but in a modified version, with a smaller capital gains tax increase (the initial proposal nearly doubles the current rate from 20% up to 39.6%!) and a different effective date. However, financial advisors across the country are keeping close watch as the proposal moves through Congress and are taking steps to help their clients prepare. This could include strategies like increasing pre- or post-tax charitable donations in order to max out that deduction and reduce a client’s tax bill. Savvy advisors and clients may decide to include stock donation into their tax strategy, since this type of giving circumvents the capital gains tax altogether.

This could be a huge windfall for nonprofit organizations who stand to benefit from large-scale shifts in wealth taxation. To respond accordingly, nonprofits should consider making stock donations a core part of their fundraising strategy, expanding beyond traditional post-tax cash donations, which make up the bulk of charitable giving in the U.S. Thanks to the growing popularity of stock gifting, services like DonateStock have simplified this once complex and time-consuming process so that nonprofits can easily secure stock donations from new and existing donors via a simple, secure online dashboard. 

Smart Fundraising Made Easy

Appreciated stock represents a huge funding opportunity for nonprofits, especially with tax reforms looming on the horizon. DonateStock can help you tap into it. Signing up is fast, easy, and free.