Selling a stock gift that overpays a pledge (has a remainder)

Vanessa Taylor

Hello! I found the Knowledgebase article that answers my question (below), but I'm not sure I completely understand what it's telling me to do. Can anyone help clarify for me? I have a stock gift that was used partly to pay off a pledge, and the rest of the stock gift is entered as its own remainder gift. How do I "sell" this stock in RE now that it's split into two gifts so that the net gain/loss is accurate? Thank you!

 

KB answer: How to distribute credit for a large stock gift that was used to pay a pledge balance while the overpayment was created as a separate stock gift



A donor may choose to make a pledge payment of stock/property, and the donation is more than the amount due on the pledge. If an overpayment is created, and the stock is eventually sold, the user still has to properly distribute the credit or loss of the sale of the stock/property.

The stock gift that was used to pay the pledge should be credited the amount of the pledge payment.



The stock gift created for the overpayment of the pledge should be credited for the sale price of the certificate less the amount already applied to the pledge.



When selling the stock gift, the profit and/or loss of the sale and the commission should either be (as) distributed proportionally between the stock gift that was used to pay the pledge and the overpayment stock gift or (b) placed entirely on the stock gift that was used to pay the pledge or the overpayment stock gift. 

 

JoAnn Strommen

Vanessa,



I opt for easy solutions - do you have the option to adjust the pledge amount so that the entire stock gift can be applied to it?  If you can do that, to me that's the easiest.  Have done this when stock sale ended up being more than pledge balance.



If you don't have that option, to me the last paragraph of KB solutions says you divide the gain/loss between the two gifts.  If the gift amount to pay the pledge was 70% of the stock and the remainder gift 30% then you use those percentages.  Don't have an open stock gift I can look at to see how you'd do it exactly.  Sounds like a good question  for chat support.

Vanessa Taylor

JoAnn Strommen:

Vanessa,



I opt for easy solutions - do you have the option to adjust the pledge amount so that the entire stock gift can be applied to it?  If you can do that, to me that's the easiest.  Have done this when stock sale ended up being more than pledge balance.



If you don't have that option, to me the last paragraph of KB solutions says you divide the gain/loss between the two gifts.  If the gift amount to pay the pledge was 70% of the stock and the remainder gift 30% then you use those percentages.  Don't have an open stock gift I can look at to see how you'd do it exactly.  Sounds like a good question  for chat support.

Thanks, JoAnn! Adjusting the pledge amount doesn't work in this instance (it's the last installment in a long-standing pledge), but that would be a good alternative in a different situation. I agree with your reading on the last paragraph and that's what I passed on to the gift entry person (with the caveat that I'm slightly confused), but those additional paragraphs above tied my brain in knots for some reason. Glad to see you didn't find the KB answer 100% clear either.

Carolyn Moatz

We actually create the gift for the remainder, then sell the stock entirely on the primary gift, and enter $0.00 when selling the remainder gift stock. Since it all posts at the same time, our business office is fine with that solution.

Gracie Schild

Hi - I don't blame you for being a bit confused - just try and figure out how to record stock transactions in Financial Edge and you'll run screaming from the room!  In our case, we usually pay off the pledge in the exact amount and put the profit or loss (i.e., the stock sold info) on the remainder gift.  We might change that if the gift was split in the middle - in that case, we'd look at which one can take the loss or use the profit more usefully.  The same amount (value on day of receipt) is credited to the donor no matter what. If the remainder gift is substantial (say, more than $500) we will give the donor the option of a different designation.  If the remainder is just a little over the pledge, we would often adjust the pledge amount to match.  As the only stock gifts we've received have been from Trustees and Foundation Board members, this is all "in the family". We also have a policy of selling stock immediately rather than holding it (long story, not relavant here), so we can see the receipt/gift amount and the profit or loss/sold amount before we start any data entry and can decide how to handle the gift.  We're a small shop, so we can just talk it over amongst ourselves to make sure we're being consistent.

Cathleen Mai

We record a second pledge. This way you can apply one single stock gift towards the two pledges. The original gift amount stays intact and it is easier to track later on.

Vanessa Taylor

Our situation has now ceased to exist (the gift entry person realized today the stock gift was accidentally entered twice, so the pledge actually shouldn't have ever been overpaid to begin with), but these responses have been interesting. We don't have a lot of stock gifts and I don't do gift entry, so this was a new situation for me. Thanks for the responses!