A Guide to Leveraging Stock Donations for Your Nonprofit

Stock gifts have different requirements for acknowledgment letters than cash gifts. Tools like Overflow can automate this process and ensure compliance with those guidelines. Donorbox’s new integration with The Giving Block allows nonprofits to accept donations of stock and crypto – which majorly boosts both their fundraising revenue and donor acquisition. These days, it’s vital to offer as many different ways for donors to support your nonprofit as possible – and there’s one big type of giving that many nonprofits overlook. Stock donations are easy, effective ways for nonprofits to increase their contributed income while offering lucrative perks for their donors. Donating appreciated stocks directly to nonprofits is a giving channel that is not often well understood or widely used.

• Instruct your broker to transfer shares to Piedmont Healthcare Foundation by contacting Truist Bank via phone or email.
• But when it comes to donating assets to charity, mutual fund donations function similarly to stock donations⁠—and similar rules apply regarding mutual fund and stock donations and matching gifts.
• That means you’ll want to keep an eye out for new programs being established and existing matching gift companies expanding their eligibility criteria.
• While the second option requires more work, we want to go over what it involves so you can decide which method is right for you.

Can I Donate Stock to Charity?

Once your nonprofit receives the donation, you may choose to reinvest it to increase the donation’s value even further or liquidate it into cash. If your nonprofit hasn’t started accepting stock donations yet, it’s not too late to get in on the action. Historically, it has also been incredibly difficult to make stock gifts. Donors had to go through an individual broker and complete several manual steps in a long process. Even donors interested in stock gifts often did not have the time or resources to navigate that process. Stock gifts are one of the most tax-beneficial ways for donors to give and open a new, responsive method of accepting donations by your supporters.

How to Accept Stock Donations The Donorbox Guide

• When selling stocks, individuals usually have to pay 37% tax on the appreciated value of their shares.
• When making a stock donation, enter the market value of the stock on the day you issued the stock to the nonprofit organization.
• Following your account settings and preferences, donated stocks can be automatically liquidated and deposited into your linked bank account.
• The stock becomes the asset of the organization once it is transferred to the organization, rather than when it is sold.
• Donorbox’s new integration with The Giving Block allows nonprofits to accept donations of stock and crypto – which majorly boosts both their fundraising revenue and donor acquisition.
• If you sold the stock and donated the proceeds, you would owe taxes on the capital gain—the difference between the current market value and your cost basis.

This way, the amount that would have gone to the Internal Revenue Service (IRS) as taxes stays with the charity. Once you receive a donation of stock, a thank you and acknowledgment letter should be sent to the donor. Not only is this the right thing to do, but it’s also required how to accept stock donations by the IRS for any gift over $250. The best practice is to do this upon receipt of the gift, but it’s acceptable to do so within 30 days based on volume. For accounting purposes, publicly traded stock should be counted at the average of the high and low selling prices on the gift date (the date you receive it). If you decide to accept closely held stock (not publicly traded) and receive a gift over $10,000, the IRS requires that you get fair market value from a qualified independent appraiser.

What are the benefits of accepting stock for nonprofits?

• Donors seeking the information on their employers’ giving program can do a similar search of online resources, or they may look to internal documentation in an office policy handbook, workplace giving portal, etc.
• If the fair value of the stock upon receipt of the gift is greater than the pledge receivable balance, the organization will record a contribution for the difference.
• Within their plethora of suggested giving methods, gifts of security are highlighted along with detailed instructions on how to conduct the transfer process.
• Merck & Co. matches numerous types of employee donations to charitable organizations.
• The difference revealed in that study is staggering, but maybe not surprising considering the benefits that donors derive from handing over some of their stock to a nonprofit.
• Did you know that 90% of the average U.S. citizen’s wealth is tied up in non-liquid assets like stocks or business interest?

With these tips in mind, your nonprofit will be on the path to leveraging stock donations in no time. Once you start seeing positive results, consider branching out to accept other noncash donations as well and truly tap into the future of online giving. Imagine that a high-income donor who normally donates mid-level cash gifts to your nonprofit also owns multiple publicly traded stocks. When your nonprofit lets them know they can give a larger contribution and reduce their own tax obligations, they jump at the chance to donate high-value stock.

Why Donate Stock to Charity?

• When your nonprofit lets them know they can give a larger contribution and reduce their own tax obligations, they jump at the chance to donate high-value stock.
• Since then, GE has expanded its employee giving program to encompass new methods of giving⁠—including contributing securities⁠ such as stocks—as well as more nonprofits being eligible to receive funding.
• There are obvious risks in turning a profit on stocks and other securities.
• Plus, they’ll give you general guidance on nonprofit investing best practices, in case you decide to reinvest any of your stock donations.
• Contributions are recorded and contribution receipts are dated as of the date the gift of stock is received.
• Once you’ve completed these steps, you’re ready to move forward with receiving stock donations.

Donors seeking the information on their employers’ giving program can do a similar search of online resources, or they may look to internal documentation in an office policy handbook, workplace giving portal, etc. Piedmont Healthcare utilizes its website to encourage stock donations by interested supporters. One way they do so is by briefly highlighting the benefits to both their institution as well as to the donor contributing the appreciated securities (of both stocks and mutual funds). Donating stock to charity can benefit both the donor and the recipient organization. Many organizations, including hospitals, schools, and various nonprofits, accept charitable donations of stocks or securities as gifts.

As you promote your stock giving option in marketing and conversations, direct donors and prospects straight to your new stock giving page. Here, they’ll input their information and begin the transaction process. Platforms like FreeWill make it easy to address all the concerns discussed above. You can create a lead-capture page for stock donors, steward your relationships with ease, and automate form and retained earnings receipt delivery.

Comparing Tax Savings of Stock Donations with Cash Donations

The information here is provided for educational purposes only and is not intended to provide, Accounting for Churches and should not be construed as providing legal or tax advice. This information is general in nature and is not intended to serve as the primary or sole basis for investment or tax-planning decisions. Use of FreeWill’s services is subject to the Terms of Service & Privacy Notice. Nonprofits that actively encourage and accept non-cash assets display revenue growth 66% higher than those that only accept gifts of cash. Nonprofit investment advisors provide services like portfolio management and cash management strategies.

Accounting for Stock Gifts for your Not-For-Profit

If the organization incurs any fees related to the selling of the stock, that amount should be recorded as investment fees expense. That means more than a third of the money from the shares is going to the government. Even if the stocks were sold to make a donation, the money spent on taxes is gone forever and can’t be used by the donor or the charity. Meanwhile, if you donate the stock directly to a charity, you pay no capital gains tax—and neither does it, assuming it’s a tax-exempt non-profit (the only kind you should be considering, really).