Gifts of Stock - Information Question

Stacey Brake · January 2021

I am needing confirmation on how to track stock gifts and thought this forum would be able to give me feedback. I have always been taught that when a donor gives a gift of stock, the value of the gift is the value of the stock on the date it is transferred to our financial institution (when we receive the gift from the donor). I am running into some confusion about this because I have others telling me the value of the gift is what it sold for. I'm curious how other organizations track gifts of stock. Any feedback would be most helpful. Thank you in advance!

JoAnn Strommen · January 2021

Part of the issue is defining "value." Value of deduction for the donor or value of gift to the org. The orgs I have worked for have credited the donor with the value of the stock when donated as gift value. The value of the stock when sold, loss or gain, is considered more like a cost/gain of doing business. It's not within the donor's control when stock is sold or at what price. When the difference between the two is large it can be a challenge to accurately reflect balance applied against a pledge depending on how you enter the stock gift in RE.

Just my thoughts.

Stacey Brake · January 2021

Thank you very much JoAnn! Yeah, it's always a challenge to balance with Accounting because I've always used the "date of transfer" value as the gift amount and they use the sale amount. I agree it does make it tricky when applying date of transfer value to a pledge. (Especially when the donor wants that particular amount to go towards their balance.) Sticking to that date of transfer value consistently makes it easier for us, the donor, and the overall relationship with them though. Thanks again for your feedback...have a nice weekend!

Elizabeth Rich · January 2021

At both places I have worked, we valued the stock on the day it was received in our account. We took the average of the high and low of the day and multiplied by the number of shares.

Karen Hartt · January 2021

Hi Stacey.

I have been working with gifts of stock for over 30 years between the trust department at a local bank and at the community foundation. The rules we have always used are based on information from the IRS relating to gift date.

If the stock is in physical form the gift date is determined by either the day it was hand delivered to the Foundation, or if mailed the date it is postmarked.

For securities either DTC or ACAT eligible it is the day the securities hit our account at our brokerage firm.

Value for bonds is calculated by the average of the selling price the day before delivery and the day of delivery.

We monitor our accounts every day, maybe the ones telling you to value the day it is sold is actually the date received and they organization has a policy to sell when securities hit the account, so it is one and the same, technically.

Stacey Brake · January 2021

Thank you Elizabeth!

Stacey Brake · January 2021

Thanks for the info Karen! Really appreciate it!

Brenda Ryther · January 2021

Hi Stacy - We do it just as you stated. The day the donor transfers stock to our account is their gift value and date. Our brokerage office send me the the highs and lows for the particular stock that day and the gift amount is based off the average sell price for that day. When we get the proceeds, I turn in a reconciliation slip to the finance office that has the donor's gift amount and date vs the check amount and date from proceeds. We always go by donor gift value and date for Advancement reporting.

Stacey Brake · January 2021

Thanks Brenda! Appreciate your feedback! Nice to know I'm following best practices like other organizations.

Kellie DeMers 2 · April 2021

This runs into another questions. Way back early in my advancement services career I was told by a tax attorney that for acknowledgement purposes, you put the number of shares of stock, the value of the stock and the approximate total value in the tax acknowledgement. My boss, who loves to do research, is now saying some accountants are saying that the letter should only state the date and number of shares received. I can't really find any information on the IRS website. Anybody have any current information on this?

Stacey Brake · April 2021

Hi Kellie - We include the following on the tax/acknowledgement letter (sometimes the date is not included here as it may be mentioned elsewhere on the letter):

1. Number of shares received

2. Name of stock (Apple, Disney, etc.)

3. Date it was received/transferred

4. Value on the date of transfer

"Thank you for your donation of 10 shares of Disney, Inc. stock received on 10/26/18 and valued at $5,275.43."

I don't have any current IRS information but we treat this like any other cash gift. Hope this helps!

JoAnn Strommen · April 2021

Per IRS publication 1771 required elements of written acknowledgement:

1. the name of organization 2. the amount of cash contribution 3. a description (but not the value) of non-cash contribution .... Value is not required.

Previous org we did # of shares, name of stock, date gifted. We did not research value. That is their responsibility. That's what I was advised to do years ago.

Here, procedure does list average value based on high/low. Entire process is different as stocks are not recorded as 'sold' in RE here.

You'll find it done both ways.

James Kew · April 2021

Your boss is probably looking at IRS Publication 1771, item 3 under the heading "Written Acknowledgment":

"3. a description (but not the value) of non-cash contribution"

Madeleine Holdsworth · April 2021

We used to provide a value of the stock but reversed that policy several years ago based upon research provided by AASP and the IRS. It is the donor's responsibility to provide the stock value to the IRS, not you. Our receipt indicates the number of shares, company and stock symbol and date processed. If pressed by a donor for a value, I would indicate that the value provided is for your internal purposes and also add a disclaimer that they need to consult a tax professional. We use different tax language on the receipt issued for stock, "xxxx is a 501(c)(3) non-profit organization. Tax ID #xx-xxxxxxx. No goods or services have been provided in exchange for this generous contribution. Please seek guidance from your tax advisor in determining your tax-deductible amount."

Stacey Brake · April 2021

Thank you Madeleine! Really appreciate the information!

Stacey Brake · April 2021

Thanks JoAnn!

Stacey Brake · April 2021

That's what I have always done too...gift value is the value of the stock on the date it was transferred to our financial institution. Once the stock is in our possession, we can do what we want with it. We have had donors use gifts of stock as pledge payments so for us, it's important to have that value. Thanks again for all your help!

Gifts of Stock - Information Question

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