Donating Appreciated Stock and Using a DAF

If you give to charity every year and you're also sitting on employer stock you've held a long time — exactly the position you're in if you've been vesting RSUs or exercising options for years without selling much — writing a check is usually the more expensive way to give. This article walks through why donating the shares themselves usually beats donating cash, how much of your income you can actually deduct for it, when routing a large gift through a donor-advised fund helps, and what the IRS expects you to document once you do it.

Why donate shares instead of cash?

When you give appreciated stock you've held for more than a year directly to a charity, two things happen at once: you get to deduct the full fair market value of the shares on the day you give them, and you never have to report the capital gain built into those shares as income — the appreciation simply passes to the charity along with the stock. Compare that to selling the shares first and donating the cash: you'd owe capital-gains tax on the sale, and only the after-tax proceeds would be left to give away, so the charity receives less and you still owe the IRS. For someone who has been vesting RSUs or exercising options over several years, the shares that have appreciated the most and sat the longest are usually also the ones creating the biggest concentration risk in a portfolio — which means a charitable gift of stock can serve two goals in the same transaction: reducing a concentrated position and making this year's gift, without a sale in between. The deduction still has to fit inside the percentage-of-income limits described next, and the shares have to be held long enough to qualify for fair-market-value treatment rather than being limited to what you paid for them — both covered below — but the mechanism is the same regardless of size: give the stock itself, not the proceeds of selling it, and the built-in gain is never taxed to you at all.

How much of my income can I deduct?

The deduction for a gift of appreciated stock to a public charity is capped at 30% of your adjusted gross income for the year — a lower ceiling than the 60% cap that applies to a cash gift to the same kind of charity. If your total giving for the year is large relative to your income — a real possibility in a year with a big vest, a tender offer, or another liquidity event — you may not be able to deduct the entire fair-market-value gift in the year you make it. The good news is that the limit is not a ceiling on the deduction itself, only on how much of it you can use in a single year: whatever you can't deduct this year because of the cap carries forward and can be used in each of the next 5 years, until used up. Because cash and appreciated stock are subject to two different caps, a donor who gives both in the same year needs to know which limit applies to which gift, and in what order the two interact, before assuming the whole combined gift is deductible now. For 2026 there is also a floor under the ceiling: only giving above 0.5% of your adjusted gross income is deductible at all. This is also why timing matters: if you're planning a gift sized to a specific high-income year, it's worth checking the applicable percentage limits before deciding how much stock versus cash to give, rather than after you've already made the gift and are filing the return.

What is a donor-advised fund and when does it help?

A donor-advised fund (DAF) is a charitable account you open at a sponsoring organization — a public charity set up for exactly this purpose — rather than a private foundation you'd have to run yourself. When you contribute cash or appreciated stock to the DAF, you get your deduction that same year, for that year's gift, even though the money doesn't have to go to any specific operating charity right away: the DAF sponsor takes legal control of the assets, and you retain only advisory privileges over which charities eventually receive grants from the account, on whatever timeline you choose. That separation between when you get the deduction and when the charities actually receive the money is what makes a DAF useful in an unusually high-income year — the year of a large vest, an employer's IPO, or a tender offer you participated in. Rather than identifying and researching every charity you might want to support before your tax return is due, you can make one larger contribution to the DAF in the high-income year, take the full deduction against that year's income, and then recommend grants out to specific charities over the following months or years at whatever pace makes sense. For someone unwinding a concentrated position built up over several years of vesting, a DAF also accepts the appreciated stock directly, so the same shares that would otherwise trigger the analysis in the next two sections can fund years of future giving in a single transaction.

Can I donate shares I just received from a vest?

Yes, you can donate shares the day after they vest — there's no rule against it — but the tax result is different from donating shares you've held for years. Stock you've owned for one year or less is short-term capital-gain property, and the deduction for short-term property is limited to your cost basis, not its current fair market value, even if the shares have gone up since you received them. For RSU shares fresh off a vest, that limitation costs you very little: your basis in those shares is the fair market value used to calculate your compensation income at vest, which is close to today's price if you're donating shortly after. So a gift of newly vested shares and a gift of cash are, for tax purposes, close to the same thing — you're not losing much by giving them away immediately, but you're also not gaining the fair-market-value benefit described in the first section. That benefit — deducting more than you originally paid, without ever paying tax on the difference — only shows up once the shares have been held for more than a year, which is exactly why the biggest tax-efficient gifts tend to come from your oldest, most-appreciated holdings rather than your most recent vest. If unwinding concentration is also a goal, it's worth comparing which lots have cleared the one-year mark before deciding which shares to give away first.

What do I need to substantiate the gift?

Any gift of $250 or more needs a contemporaneous written acknowledgment from the charity describing what you gave and confirming you received nothing of value in return — keep this with your tax records, because the IRS can disallow the deduction entirely if you can't produce it on request. Above $500, noncash gifts also have to be reported on Form 8283, filed with your return, describing the property and how you determined its value. For gifts of property other than cash — above $5,000 — the general rule adds one more requirement: a qualified appraisal, prepared by a qualified appraiser, supporting the value you're claiming. Publicly traded stock is the one major exception to that appraisal requirement: because the value of a share trading on a public exchange is verifiable from public price data on the date of the gift, you don't need a separate appraisal to substantiate its value the way you would for real estate or closely held stock, even if the total gift is well above $5,000. That exception is exactly why donating shares of your employer's publicly traded stock is administratively simple compared to donating a harder-to-value asset — you still need the acknowledgment letter and Form 8283 once you're above their thresholds, but you can skip the appraisal step entirely.

Key numbers (2026)

• AGI limit on gifts of appreciated stock to a public charity — capped at 30% of your adjusted gross income for the year; cash gifts to the same type of charity are capped at 60% (IRS Pub 526).
• Carryforward for the unused portion — a gift that exceeds the applicable AGI limit carries forward and can still be deducted in each of the next 5 years, until used up (IRS Pub 526, "Carryovers").
• Holding period for fair-market-value treatment — you must have held the shares for more than one year; shares held one year or less are short-term property and the deduction is limited to your basis (IRS Pub 526, "Giving Property That Has Increased in Value").
• Form 8283 and appraisal thresholds — noncash gifts of more than $500 must be reported on Form 8283; gifts valued at more than $5,000 generally require a qualified appraisal, except for publicly traded securities, which are exempt from the appraisal step at any dollar amount (Instructions for Form 8283; IRS Pub 561).
• 2026 standard deduction — $32,200 for married filing jointly and $16,100 for a single filer; your itemized deductions, charitable gifts included, have to exceed that before itemizing saves you anything (Rev. Proc. 2025-32).

Current as of 2026-09

Sources

• IRS Publication 526, Charitable Contributions — https://www.irs.gov/publications/p526
• Internal Revenue Code §170(b)(1) — https://www.law.cornell.edu/uscode/text/26/170
• IRS Publication 561, Determining the Value of Donated Property — https://www.irs.gov/publications/p561
• Instructions for Form 8283, Noncash Charitable Contributions — https://www.irs.gov/instructions/i8283
• IRS Newsroom, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill" — https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
• Revenue Procedure 2025-32 — https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

Sample content for demonstration purposes — not financial advice.