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Gifts of Securities: Receiving, Valuing and Acknowledging A Resource of the The Osborne Group, Inc. Gifts of securities – especially highly appreciated securities that have been held for a long time, or have enjoyed recent increase – often enable our donors to be able to give more than they otherwise would. Being able to receive, value and appropriately acknowledge these gifts takes some knowledge, but is one more terrific way to demonstrate the professionalism, care and attention of your agency’s fund development program. Gifts of Securities Include: Shares of stocks traded publicly (New York Stock Exchange, NASDAQ, American, etc…) o There are also some stocks in family businesses, or limited partnerships that are “thinly traded”. Be aware that it may be cumbersome, costly and may take significant time to sell these shares if you accept them as a gift. Seek advice from a broker before accepting this type of security. Shares of mutual funds Bonds or bond funds Benefits of Giving Stock To Your Donor: Ability to make a gift at full, current value of the shares given, not the price at purchase, an “inexpensive” way to make a larger gift Ability to take a tax deduction to the full extent of the law for the current value of the shares given To Your Agency: Great, often large, gifts from appreciative, philanthropic donors! Ways to Give Electronic Transfer: The donor electronically transfers shares into your agency’s brokerage account where they are sold and the proceeds (the cash value) are sent to your agency. o If you have not done this already, set up a brokerage account to receive gifts to your agency. This is something board members or other partners may help you to do, and may negotiate low costs for trades. o THIS IS THE PREFERRED METHOD FOR RECEIVING STOCK GIFTS. Certificate & Power: The donor sends your agency the stock certificate and a signed “stock power” under separate cover. Together these are “as good as cash” and can be redeemed by anyone possessing both documents, so keep these documents safe. o Once you have both documents, you may also need additional documentation from your financial institution indicating who within your agency has legal authority to remit these shares to your brokerage and redeem the shares. o THIS IS NOT THE PREFERRED METHOD FOR RECEIVING STOCK GIFTS. Donor Trade: The donor sells the shares from their own account and remits the proceeds to you as if they are giving cash. o THIS IS NOT THE PREFERRED METHOD FOR MOST DONORS BECAUSE TAX ADVANTAGES ARE GIVEN UP. Determining Gift Date: The “gift date” or “effective date” is the date you will use to reflect the gift in your records and your donor will use to declare the value to the IRS. Electronic Transfer: “Gift date” is determined when the shares arrive in your agency’s brokerage account. o Some brokers use a holding account called a “temporary gift account” where they will transfer shares before sending them on to you. o The IRS has ruled that this is not an acceptable way to determine the date of the gift because the organization does not yet have control of the shares, even though they have left the donor’s account. Stock & Power: “Gift date” is when your agency has both the certificate and the stock power in your possession, regardless of when the shares are sold and the cash value comes to the agency. Acknowledging Gifts of Stock: The official IRS receipt for securities should include only this information: Name of the donor Name and number of shares given Date of the gift (when your agency had control of the shares) Average price of the shares on the effective or gift date o You can find this in the newspaper or online o Be certain that you average the high and low price for that date, and don’t include the “Close” price of the shares on that day o For bonds or mutual funds: These funds often have only one price per day; your broker will need to advise you on the average price for these types of share.
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