Transfer & structure
Donating Appreciated Private Stock to Charity
A way to avoid capital gains tax on appreciation entirely — if you plan for it well before a sale is negotiated.
What it is
Donating an appreciated, illiquid private stock position to a qualified charity — often through a donor-advised fund — instead of selling it, potentially avoiding capital gains tax on the appreciation while still claiming a charitable deduction for fair market value.
Why it matters for a secondary
Because private stock is illiquid, most charities and donor-advised funds need real lead time to accept and eventually liquidate the position, and a qualified independent appraisal is generally required for non-public stock donations above a certain value. This needs to be planned well before any liquidity event, not decided the week a sale closes.
Quick facts
- Potential benefit
- Avoid capital gains tax on appreciation AND claim a fair-market-value deduction, if structured correctly
- Appraisal requirement
- Generally required for non-public stock donations above a certain dollar threshold
- Lead time typically needed
- Often months — most donor-advised funds need real runway to accept illiquid private stock
Common mistake: Deciding to donate only after a sale is already substantially negotiated — the tax benefit generally requires donating the stock itself, not the cash proceeds from selling it.