holding onto donation money: short vs long term capital gains tax?

[maximustodd]

I give about 10% of what I earn away to my local church and was thinking that I could maybe be smarter with that money and still give it to them just not bi weekly with my paycheck.

So what I was thinking is that I take that money put it into my taxable betterment account to gain instrest over the year and then at the end of the year withdraw what I was going to give and then leave the gains.

But then I remember in the back of my head something I read a while ago about short term vs long term capital gains tax? Help me out here.

Is the dumb, ok, smart, or what? Figured the money would be working so why not?

[MDM]

If the investment increases in value you will retain more than if you donated the original principal.  Yes, the tax on short term capital gains (or interest) will take a bigger piece of your gain than tax on long term capital gains, but you still come out ahead.

If the investment decreases in value, what will you donate - the original principal or the decreased amount?

[forummm]

Actually, it works out better to just donate the appreciated securities to them. If your stock goes up you can donate the actual shares to them and take a deduction for the full value of the shares at the time of donation. And you don't have to pay the capital gains tax that would have been due if you sold the shares. So short-term or long-term gains don't matter. You could always donate whatever shares have the highest unrealized gains.

[Cheddar Stacker]

If you do it the way you laid out, yes you'd pay short-term cap gain rates. Forummm makes a great point, no need to sell and donate cash. If you want to donate just the 10%, not 10% + earnings, just donate most of the shares. Alternatively if you prefer giving cash for some reason, while not optimal, you could still do it and pay long -term rates. You'd just have to hold slightly more than a year.