By gifting these assets directly to charity, your client can contribute significantly more than donating the post-sale proceeds, and also take a tax deduction for the fair market value of the asset up to 30% of adjusted gross income. Any capital gain taxes are effectively eliminated, benefiting both your client and the causes they care about.
Once the cryptocurrency is transferred, the donor-advised fund sponsor can sell the contributed asset to fund your client’s charitable efforts. As the donor, your client has the opportunity to immediately make a grant to their charity or they may choose to recommend how the contribution is invested and potentially grow it tax-free, ultimately providing greater charitable/philanthropic support.
Consider this example:
Challenge your clients to get creative about funding their philanthropy. A bit of strategy can go a long way in maximizing impact.
Arthur Maginas is a director in the Complex Asset Group at Fidelity Charitable, where he works directly with donors and their advisors to provide technical expertise and advisory resources before, during and after the gifting process to ensure that donors achieve the most favorable tax treatment with the greatest charitable impact.