Gift Stocks: Donations That Matter

The COVID-19 pandemic has left organizations with greater need than ever before. As many non-profits are striving to balance budgets and endeavoring to meet their missions’ objectives, it reinforces an even higher need to strengthen relationships, rally advocates, and make it simple for donors to give.

Many charities accept not only cash as donations, but also stocks, bonds and mutual funds. Gifts of stock in general are a very popular way to give to non-profits. Other than cash, gifting stock to charities may perhaps be the most simple and straightforward way of giving. If your organization has not historically accepted or established a gift stock policy, Beacon Pointe Advisors recommends doing so and we can be of help to draft the appropriate documents and communications.

Since 501(c)(3) charities are tax-exempt, should an organization choose to sell the shares which have been gifted to them; any tax incurred during this process is essentially absolved. Not only that, there are also substantial tax benefits to the donor, as well. When gifted stock is given to a non-profit by a donor, an income tax deduction can be taken for the market value of the stock at the time of gifting. Additionally, the donor is able to avoid paying tax on any long-term capital gains which is a big benefit to the donor. This applies, of course, only if taxes are itemized.

Be Ready

As you begin to market your charity through a series of calls, emails and mailing campaigns, make sure to similarly promote gift stocks on your website as a way your organization receives contributions. Again, making it easy for a donor to give is key. In addition, having a brokerage account set up and in place is necessary to make any transaction run smoothly and swiftly. Your Beacon Pointe institutional consultant is able to assist your organization with this process and further outline the steps needed to ensure each transaction is seamless. Beacon Pointe is in the process of connecting with each of our clients to establish dedicated gift accounts and outlining the appropriate instructions to make it an uncomplicated and efficient process for donors to give. Here are some other great ways to help facilitate an increase of gift stock income this year:

  • Determine a donor who is willing and able to match any incoming donations
  • Outline your organization’s expenses and why you need them to donate more this year
  • Send a final “last chance” year-end email requesting gift stocks in early December
  • Implement the use of an online stock donation tool to make transactions effortless
  • Educate your donors about the best way to transfer stock to your organization
  • Create options for donors to make their gift automatic and reoccurring

Donor Follow-Up

As a general recommendation, a written letter of acknowledgment to the donor should be created and sent within 30 days of receiving any donation over $250. This is done not only to acknowledge and thank the donor for his or her generosity, but particularly for tax purposes as well. The letter should contain the following information: name of the organization, declaration of organization’s 501(c)(3) status, the donor’s name, the date the gift was received, and the gift amount. This letter of acknowledgment is an important step because it allows the donor to see that donating to your organization is a smooth and easy process and makes them more likely to donate again in the future.

More Ways to Give

There are various ways that your donors may choose to contribute to your non-profit. The following is a list of eight specific approaches that donors can choose to help your organization continue to grow and make a difference through end-of-year fundraising campaigns:

Stocks and Bonds                                       Wire Transfers                                   Donor-Advised Funds                                         Cryptocurrency

              Mutual Funds                                                  IRAs                                                  Real Estate                                              Charitable Lead Trusts

In Summary

Gifting, no matter what kind, possesses just as much benefit to the donor as it does to the beneficiary. While there are many ways to give, giving is best when it is done with meaning. Here are three key reasons why donors should give to your non-profit’s year-end gift stock campaign today:

  1. Donors will be satisfied because they have contributed to an organization that is important to them and again peace of mind knowing they have made a charitable investment with significant positive impact.

2. Donors will be able to receive an income tax charitable deduction on the entire fair market value of a gift stock at the time of gifting.

3. Donors will be able to avoid any capital gains on his or her donation.

As we quickly approach 2021, your Beacon Pointe consultant can help set up a gift stock account that is right for you and your organization. Beacon Pointe truly understands the importance of donor relations and annual gifts. Please be sure to reach out to your Beacon Pointe consultant today to help further explain appropriate gifting guidelines and opportunities.

For additional information, please contact:

Felix T. Lin, CFA
President, Institutional Consulting Services
Phone: (949) 718-1609
flin@beaconpointe.com

 

Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

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