Does your nonprofit organization accept gifts of stock and other securities?
If not, you are leaving money on the table. Most likely, a donor who can give a major gift owns investments. They want to save on capital gains taxes by donating stock to a charity.
Gifts of stock tend to be larger than annual donations. These gifts can create greater impact and can provide tax-benefits for donors. Click HERE for more reasons to accept stock gifts.
There are some mechanisms and policies to have in place to successfully accept, process, and sell securities.
Gift acceptance policy.
Brokerage account or third-party vendor.
Designated point person with authority to accept these gifts on behalf of the organization.
Don’t Play the Market
Your gift acceptance policy should include a clear and concise statement that says your agency accepts these types of gifts; that you have the procedures in place to accept, process and sell the stock, and that all such gifts will be sold within a certain amount of time, such as three business days.
A brokerage account is sort of like a bank account but holds stocks instead of cash. Firms such as Charles Schwab and Fidelity have been in the investments field for decades. Banks are now allowed to have investments departments, and the newest option is the third-party vendor who accepts and sells the stock gift on your behalf.
Ask your board members and/or banker for recommendations. They may also be able to help set up your organization’s account. Because your organization will have few transactions, you may find a broker who will provide pro bono services.
Make It Easy
Include information on your donation page about donating stock and other securities. Have a form for a donor to fill out that will notify you of a pending stock donation. Filling out your form is not a stock transaction. The form should ask for:
Donor’s name and contact information
Number of shares
Name of security
Expected date of transfer
Name of brokerage house or bank and location
Broker or banker’s name
With this information you can contact the broker and give them your organizations’ DTC number and your broker’s contact information.
Update your gift acknowledgement procedures to include stock gifts. Donors will need a receipt from the nonprofit in order to take a tax deduction.
Date of the gift, (day the stock is sold).
Number of shares and the ticker symbol.
The receipt should NOT list the value of the stock. It’s up to the donor and their tax advisor to report the value of the stock at the time of the donation on their tax return.
Use your newsletter, social media and other communications tools to let your donors know that your organization accepts gifts of stock and other securities.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.