Charitable Giving with Concentrated Executive Stock

Most executives with large employer stock positions face the same tension: the position is too big, the tax cost of selling is painful, and holding is a single-company risk. Charitable giving strategies solve this differently than a 10b5-1 sell-down or exchange fund — they let you eliminate capital gains entirely on the donated shares, take an immediate deduction, and advance philanthropic goals at the same time. For executives with genuine charitable intent, this is one of the most tax-efficient moves available.

This guide covers the five primary strategies, the 2026 OBBBA deduction rule changes that affect all of them, and the executive-specific compliance considerations that generic charitable planning guides miss.

Why appreciated stock is the optimal asset to give

Suppose you want to donate $500,000 to a charity and you hold $500,000 in company stock with a $50,000 cost basis. You have two paths:

Donating the stock eliminates the embedded gain entirely. The charity receives $500,000 in full. You deduct $500,000 at fair market value. Nobody pays the $68,250 capital gains tax — it disappears. This is why financial advisors consistently tell charitably inclined executives to give appreciated stock, not cash, and use cash for living expenses or reinvestment.²

Strategy 1: Donate shares directly to a public charity

The simplest approach: transfer shares in-kind from your brokerage account to the charity's brokerage account. No sale, no capital gains. You deduct the fair market value on the date of transfer.

Deduction limit: 30% of AGI for long-term appreciated property donated to a public charity (IRC § 170(b)(1)(C)).² A five-year carryforward applies for any excess.

Best for: gifts to a single charity where you have a long-term giving relationship and the charity has brokerage infrastructure to receive shares. Many smaller nonprofits struggle to accept stock — call ahead.

Executive compliance consideration: Donations of company stock are typically subject to the same pre-clearance requirements as sales under your company's insider trading policy. Most policies treat gifts and donations as transfers that require pre-clearance. Check with your general counsel or securities compliance officer before transferring shares. A 10b5-1 plan does not cover donations — it authorizes sales, not gifts.

Strategy 2: Donor-Advised Fund (DAF)

A DAF is a charitable account at a sponsoring organization (Fidelity Charitable, Schwab Charitable, Vanguard Charitable, community foundations). You contribute stock irrevocably, receive the full charitable deduction in the year of contribution, and then recommend grants to charities over time — on your schedule.

How it works:

• Transfer appreciated shares to the DAF. No capital gains tax — same as direct donation.
• Deduct the full FMV in the contribution year. Same 30% AGI limit for appreciated stock; five-year carryforward.
• The DAF sells the shares tax-free and invests the proceeds in a diversified portfolio.
• You recommend grants to 501(c)(3) charities over months or years — useful when you haven't yet decided which organizations to support.

Bunching strategy: If your annual giving is $30,000–$60,000 but the standard deduction ($30,000 MFJ in 2026) means you can't beat the threshold every year, consider contributing two or three years of planned giving into the DAF in a single year — especially in a high-income year when the OBBBA 35% cap hits hardest. You take the large deduction this year and grant from the DAF on your normal charitable schedule.

OBBBA note: The new 0.5% AGI floor applies. On a $2M AGI, the first $10,000 of contributions in any year is disallowed; the rest is deductible subject to the 30% limit. For most executives making large DAF contributions, the floor is immaterial relative to the gift size.³

Important limitation: Qualified Charitable Distributions from IRAs (see Strategy 5 below) cannot be directed to a DAF. They must go directly to public charities.

Strategy 3: Charitable Remainder Unitrust (CRUT)

A CRUT is an irrevocable trust that provides an income stream to you (or another beneficiary) during your lifetime, with the trust remainder passing to charity at death. It solves three problems simultaneously: diversification, income, and charitable intent.

Mechanics:

1. You transfer concentrated shares to the CRUT. The trust sells them tax-free — no capital gains on the sale.
2. The trust reinvests proceeds in a diversified portfolio.
3. Each year, the trust distributes a fixed percentage (typically 5–8%) of the trust's current market value to you as ordinary income.
4. At your death (or end of term), the remaining trust assets pass to your designated charity.
5. You receive a partial charitable deduction in year one, equal to the present value of the charitable remainder interest — calculated using the IRS §7520 rate (5.00% for May 2026).⁴

Deduction magnitude: The deduction depends on your age, the payout rate, and the §7520 rate. With §7520 at 5.00%, a 6% CRUT paying to a 60-year-old executive for life would generate a charitable deduction of roughly 20–30% of the contributed amount — a partial deduction, but the capital gains elimination on the full position is the primary benefit.⁵

IRS requirements: Payout rate must be 5–50% of trust assets. The charitable remainder interest must be worth at least 10% of the initial trust value at the §7520 rate — the 10% test must be satisfied or the trust fails to qualify as a CRT.

Best for: Executives with $2M+ concentrated positions, genuine charitable intent, and desire for lifetime income supplementation. The irrevocability is the main drawback — once assets are in the CRUT, they're committed to the charitable remainder.

Strategy 4: Charitable Remainder Annuity Trust (CRAT)

Structurally similar to a CRUT, but with a fixed dollar payment rather than a fixed percentage of current trust value. If the trust is initially funded with $1M and the CRAT payout is 6%, you receive $60,000 per year — period — regardless of how the trust assets perform.

CRUT vs. CRAT comparison:

• CRUT payout fluctuates with trust value — protects against inflation, higher when trust grows.
• CRAT payout is fixed — more predictable for income planning, but loses purchasing power over time.
• CRUT allows additional contributions; CRAT does not once established.
• CRATs can fail the 5% probability test (IRS checks that there's less than 5% probability the trust assets will be exhausted before the charitable remainder is distributed). At a 5.00% §7520 rate, most properly structured CRATs pass, but this test limits your flexibility at lower §7520 rate environments.

Best for: Executives who want predictable, fixed retirement income from the trust and won't need to add assets later.

Strategy 5: Qualified Charitable Distribution (QCD) from IRA

For executives age 70½ or older with significant traditional IRA balances, a QCD allows you to transfer IRA funds directly to a public charity — up to $111,000 per person in 2026.⁶ The distribution is excluded from income entirely (no deduction required, no income recognized).

Key mechanics:

• The IRA custodian makes the check payable directly to the charity — not to you first.
• Counts toward your RMD for the year.
• Not subject to AGI limits or the OBBBA 0.5% floor — the income exclusion bypasses those rules entirely.
• Cannot go to a DAF. Must go to a qualifying public charity directly.
• $222,000 combined limit for married couples if both spouses have IRAs.

Why this matters for executives: Many executives have large traditional IRA balances from 401(k) rollovers, and required minimum distributions push them into the 37% bracket. A QCD removes that income from the top of the stack, potentially reducing IRMAA Medicare surcharges and keeping more LTCG in the 20% bracket rather than being subject to NIIT as well.

QCDs cannot fund a DAF. If your preferred vehicle is a DAF, you must use other assets (appreciated stock, cash) — not IRA funds — to fund it.

Executive-specific compliance considerations

Pre-clearance and blackout periods

Most public company insider trading policies explicitly define "transactions" to include gifts, donations, and transfers — not just sales. You must obtain pre-clearance before donating company shares, just as you would before selling. Donations during a blackout window are generally prohibited. Contact your company's securities compliance officer or general counsel before executing any charitable transfer of company stock. The IRS does not impose a waiting period, but your employer's trading policy does.

Rule 144 for Section 16 officers

If you are a Section 16 reporting officer, you are an "affiliate" of the company under securities law. Gifts of unregistered or control shares may be subject to Rule 144 volume limitations (the greater of 1% of shares outstanding or the average weekly trading volume over four weeks) even when transferred to a charity. The receiving charity may then need to sell under Rule 144 if shares are restricted.⁷ Coordinate with your securities counsel on whether charitable donations count against your Rule 144 volume for the quarter.

Form 4 reporting for Section 16 officers

A gift of company stock by a Section 16 officer is a reportable transaction on Form 4, due within two business days. Gifts are coded "G" on the Form 4. They are not exempt from reporting, though they are generally exempt from short-swing profit recovery under Section 16(b).

Valuation date for deduction

The FMV for your charitable deduction is the average of the high and low trading price on the date of transfer to the charity or DAF — not the date you call in the order. In a declining market, timing the transfer date can matter for deduction purposes. In a rising market, transferring sooner locks in a higher deduction.

Bunching + DAF to manage the OBBBA floor

With the new 0.5% AGI floor, small-to-moderate charitable contributions in any given year may be partially disallowed. High-income executives giving $20,000–$80,000 per year may find that bunching 2–3 years of giving into a single DAF contribution every few years becomes more efficient than giving annually. The DAF stores the funds and grants them on your preferred schedule; your tax deduction is front-loaded into the bunching year.

1. 2026 long-term capital gains tax rates per IRS Rev. Proc. 2025-32: 20% rate at taxable income above $533,400 (single) / $600,050 (MFJ). Net Investment Income Tax (NIIT) of 3.8% applies on investment income when MAGI exceeds $200,000 (single) / $250,000 (MFJ). IRC § 1411. IRS 2026 inflation adjustments.
2. IRC § 170(b)(1)(C) — 30% of AGI limitation for contributions of appreciated capital gain property to public charities and donor-advised funds. Five-year carryforward for excess deductions under § 170(d). IRS Pub. 526 (2025).
3. OBBBA (One Big Beautiful Bill Act, July 2025) — permanent changes to itemized charitable deductions effective 2026: (1) 0.5% of AGI floor; (2) deduction value capped at 35% for taxpayers in the 37% bracket. DAFgiving360 OBBBA overview; Tax Foundation analysis.
4. § 7520 rate for May 2026: 5.00%, per Rev. Rul. 2026-9 (Internal Revenue Bulletin 2026-19). The § 7520 rate is 120% of the applicable federal midterm rate, rounded to the nearest 0.2%. Rev. Rul. 2026-9.
5. IRC § 664 — charitable remainder trust rules. Payout rate must be 5%–50% of initial or current value; the present value of the charitable remainder interest must be at least 10% of the initial net fair market value of trust assets (§ 664(d)(1)(D) for CRATs; § 664(d)(2)(D) for CRUTs). IRC § 664 via LII; IRS CRT overview.
6. QCD annual limit for 2026: $111,000 per IRA owner, indexed for inflation. IRC § 408(d)(8). Age requirement: 70½ or older. QCDs may not be directed to donor-advised funds, private foundations, or supporting organizations. IRS QCD FAQ.
7. SEC Rule 144 — volume limitations for "affiliates" (which includes Section 16 officers): maximum shares sold in any three-month period is the greater of 1% of shares outstanding or the average weekly reported trading volume during the four calendar weeks preceding the sale. The SEC has confirmed that gifts by affiliates are covered by Rule 144 when the donee intends to resell. 17 CFR § 230.144 via LII.

Tax values verified as of May 2026. OBBBA provisions effective January 1, 2026. QCD limit, LTCG brackets, and §7520 rate are current as of this date.