Support Charitable Giving With RSUs and DAFs
If you’ve been with your company for a while, your RSUs may have grown into a meaningful part of your balance sheet. That growth can be encouraging, but it also means more of your net worth is tied to a single stock. If giving is something you want woven into your financial life, this creates a useful opening. RSUs and DAFs can support causes that matter to you while reducing concentrated risk and creating a more thoughtful tax outcome — without using cash to do it.
A donor-advised fund, often called a DAF, is one of the simplest ways to do this.
Why RSUs create a unique charitable opportunity
Over time, employees who receive regular RSU awards can accumulate a large amount of company stock, often at much higher values than when those shares vested. That means you’re holding appreciated shares with embedded capital gains. If you sold them, you’d owe taxes on the gain.
Donating appreciated shares may allow you to reduce capital gains taxes on the appreciated amount, subject to IRS rules.. You also receive a charitable deduction (subject to IRS limits) based on the fair market value of the shares at the time of the gift. Also, because new RSUs may continue vesting each year, the shares you donate could be replenished over time, which may help support ongoing charitable contributions.
How a donor-advised fund works
A DAF is a charitable account you control. You contribute appreciated shares into the account, receive an immediate charitable deduction, and then recommend grants to nonprofits on your own timeline.
How it works:
- You contribute appreciated RSU shares directly to the DAF.
- You get a charitable deduction the same year.
- The DAF sells the shares tax-free.
- You choose which charities to support over time.
Your deduction and your giving don’t have to happen in the same year, giving you flexibility in both planning and impact.
Why a DAF pairs well with RSU compensation
A donor-advised fund works well if you are getting ongoing RSU compensation. When your company stock has grown in value, donating shares may help you reduce concentration without triggering capital gains. It may help you preserve cash for other goals while still supporting the organizations you care about..
Many people find that a DAF allows them to “pre-fund” several years of giving in a single high-income year, such as when a large vest or bonus hits. You receive the deduction up front, then distribute grants at your own pace. This turns charitable giving into part of your broader financial rhythm, rather than something you revisit only sporadically or only when a nonprofit reaches out. For anyone whose compensation includes ongoing RSU vesting, a DAF may offer a simple, repeatable way to keep generosity and long-term planning working together.
How to use RSUs for charitable giving: a simple sequence
- Identify which shares have appreciated the most.
- Consider transferring those shares directly to DAF.
- You may be eligible for a charitable deduction in the year you contribute, subject to IRS rules.
- The DAF may sell the shares tax-free
- Recommend grants whenever you’re ready.
- Revisit this strategy annually as new RSUs vest.
This may help you convert accumulated employer stock into long-term impact, often with potential tax advantages and without relying on cash (depending on individual circumstances).
Questions to ask before you contribute (and why they matter)
These questions help you decide whether donating appreciated RSUs fits your goals:
1. Do you hold more employer stock than feels comfortable?
A concentrated position increases your exposure to a single company’s fortunes. Donating may shares helps reduce that exposure without triggering capital gains.
2. Have your RSUs appreciated significantly since vesting?
The more your shares have grown, the more tax you avoid by gifting them instead of selling.
3. Are you planning to give this year or in the near future?
If giving is already part of your life, appreciated shares may let you support the same causes while potentially providing tax benefits, depending on individual circumstances.
4. Is this a high-income year for you?
A larger deduction may help offset income from big vesting events, bonuses, or liquidity moments.
5. Would you rather give shares instead of cash?
Donating stock may allow you to support charitable causes while potentially preserving cash for other financial goals, depending on individual circumstances”.
6. Do you receive new RSUs every year?
Ongoing vesting may help replenish shared you donate over time, which could support continued charitable giving depending on individual circumstances.
7. Do you want more flexibility in the timing of your giving?
A DAF separates the tax deduction from the grant itself, so you may contribute when it seems financially efficient and recommend grants to nonprofits when the timing feels right.
Bringing your values and your financial life together
A DAF separates the potential tax deduction from the grants, so you may contribute when it seems financially efficient and recommend grants to nonprofits when the timing feels right. If you want help deciding whether this strategy fits your broader plan, we’re here to walk you through it.
About the Author: Bryce Baker, CFP®, is a Lead Advisor at Brighton Jones. He helps high-income professionals and families design tax-efficient investment strategies and retirement plans aligned with their values and long-term goals.
This content is for informational and educational purposes only and should not be construed as individualized advice. For individualized advice tailored to your specific circumstances, please consult with your adviser. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication.
