Twitter CEO saved $380 million in taxes by using stock donations
overview
By using stock donations as a tax optimization, donors can avoid paying up to 37% less in taxes and make more impact with their gifts instead.
We already have a winner of the covid altruism competition: Jack Dorsey.
The co-founder and CEO of Twitter, and also Square, has donated $1 Billion (€ 922 million) of his fortune to finance the fight against the virus using stock donations.
A Square terminal used in an upscale restaurant. Photo by Christiann Koepke on Unsplash
Among the tech billionaires, it’s common for showmanship between moguls to one-up each other. They fight over who has the highest stock price, who can send a spaceship to orbit, and the list goes on. It’s usually quite entertaining for the millions of followers to watch the feuds flying over the Twitter feeds. Recently, the jockeying has been over a more noble cause. With tens of millions out of work, billionaires all over the United States are giving to charities.
However, Jack Dorsey, CEO of Twitter and Square, beat everyone this season by giving over $1 billion to charities, or about 22% of his wealth. That’s a large sum that will help fund COVID-19 relief and other causes.
Did you know that $380 million of his donation will come from the government? That’s almost 40% subsidized by the IRS. Using tax maneuvering from his financial advisors, his charitable gift was able to top $1 billion, even though his out of pocket expenses will be much less.
This is all because he’s using stock donations. If he sold his Square or Twitter stock for any non-charitable purpose, he would have paid large sums of money in taxes. He was a founder in both companies, meaning he didn’t pay for his shares. Most of his stock sales will be pure profit.
Since Jack is a resident of California and is a high-income earner, nearly 40% of his gains will be owed to federal and state governments. However, giving stock to charities that later sell wipes out those taxes. It’s a clever loophole that many wealthy donors use. You can learn more about the full tax benefits and how it works in this post.
We built Cocatalyst to help everyone get that same tax trick. We want you to make more impact with your gifts. To start a donation as a donor, visit www.cocatalyst.org/start-donation.
If you’re a charity that wants to receive stock, sign up at www.cocatalyst.org/for-charities.