Securities and mutual funds that have increased in value and been held for more than one year are one of the most popular assets to use when making a gift to Northwestern. Making a gift of securities or mutual funds to Northwestern offers you the chance to support the University while realizing important benefits for yourself.

When you give appreciated securities or mutual funds you have held more than one year to Northwestern, you can reduce or even eliminate federal capital gains taxes on the transfer. You are also entitled to a federal income tax charitable deduction based on the fair market value of the securities at the time of the transfer. If you would like to make a gift of securities to Northwestern, please click here for transfer instructions.

Securities that have decreased in value do not make tax-advantaged gifts. Consider selling the security, claiming the capital loss deduction, and giving the proceeds as a gift to Northwestern.

Securities are most often used to support the University in the form of:

An outright gift. When you donate securities to Northwestern, you receive the same income tax savings that you would if you wrote the University a check, but with the added benefit of eliminating capital gains taxes on the transfer, which can be as high as 20 percent. Making a gift of securities to support the University is as easy as instructing your broker to transfer the shares or, if you have the physical securities, hand-delivering or mailing the certificates along with a stock power to Northwestern in separate envelopes. (Using separate envelopes safeguards your gift—the certificates will not be negotiable without the stock power.)

A transfer on death (TOD) account. By placing a TOD* designation on your brokerage or investment account, that account will be paid over to one or more persons or charities after your lifetime. It is not necessary for the TOD designation to transfer all of the account solely to charity—you can designate a certain percentage of the account. With a TOD account, the beneficiary you name has no rights to the funds until after your lifetime. Until that time, you are free to use the money in the brokerage account, to change the beneficiary or to close the account.

A gift in your will or living trust. If you aren’t ready to give up these assets during your lifetime, a gift of securities through your will or living trust allows you the flexibility to change your mind at any time. You can continue to receive dividends and participate in shareholder votes, and the securities are still yours if you need them for other expenses. Use our sample gift language to ensure that your support for Northwestern continues after your lifetime and that your estate will benefit from a charitable estate tax deduction.

A donor-advised fund. When you contribute to a donor-advised fund with appreciated securities, you will receive a federal income tax charitable deduction for the fair market value of the asset and eliminate capital gains tax. Because of our nonprofit status, Northwestern does not pay capital gain tax when the University sells the gifted securities.

A memorial gift. If you have a friend or family member whose life has been touched by Northwestern, consider making a gift to the University in his or her name.

An endowed gift. Create an endowment or contribute to one that is already established to ensure that your support of Northwestern will last forever.

A charitable gift annuity. Funding a gift annuity with appreciated securities or mutual funds will not only provide you with reliable payments for life and allow you to support the University, but it can offer numerous financial benefits. First, your annuity payments are often more than the dividends you would receive each year from the securities. Second, you will receive a federal income tax charitable deduction in the year the gift is made and eliminate part of the capital gains tax you would have paid if selling the securities.

A charitable remainder trust. Highly appreciated securities are one of the best ways to fund a charitable remainder trust. You may be reluctant to sell such assets directly because of the tax you would pay on the gain; however, if the assets were transferred to a charitable remainder trust, the assets can be sold without incurring the capital gains tax. The trustee can then reinvest the proceeds in order to secure a higher current income yield.

A charitable lead trust. Rapidly appreciating assets such as stocks are a great way to fund a charitable lead trust. The assets transferred to the lead trust are frozen in value for transfer-tax purposes at the time of funding. At the end of the trust’s term, all appreciation that takes place in the trust will pass tax-free to your heirs.

*State laws govern payable on death accounts. Please consult with your bank representative or investment advisor if you are considering this gift.

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Next Steps

  1. Contact Northwestern Gift Planning at 800-826-6709 or giftplanning@northwestern.edu for additional information on appreciated securities.
  2. Seek the advice of your financial or legal adviser.
  3. If you include Northwestern in your plans, please use Northwestern's legal name and federal tax ID number.

Legal Name: Northwestern University
Address: 633 Clark Street, Evanston, Illinois 60208
Federal Tax ID Number: 36-2167817

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A charitable bequest is one or two sentences in your will or living trust that leave to Northwestern a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I, [name], of [city, state, ZIP], give, devise and bequeath to Northwestern [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Northwestern or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate, or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the gift tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Northwestern as a lump sum.

You fund this trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Northwestern as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Northwestern where you agree to make a gift to Northwestern and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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