Posted on Wednesday, June 18, 2014
In addition to cash contributions, nonprofit organizations may also receive noncash gifts. The most common noncash contribution is stock.
Organizations should have a written policy addressing how to handle donated stock. Many organizations immediately sell the stock to obtain additional cash. If the stock is not immediately sold, then the organization is not only receiving a gift, it is also investing. Either way, a clear policy should be in place.
When donated stock is received, it should be recorded as a contribution at the fair market value as of the date of the gift. The fair market value can be determined by averaging the high and low prices for the donation date, which can be obtained from a financial website such as Yahoo Finance.
When the stock is sold, any gains or losses from the change in value of the stock should be recorded and any related fees should be expensed.
As with any noncash donation, the nonprofit should not provide a value of the gift to the donor. The gift acknowledgement should only include a description of the donation (i.e. 50 shares of Dell stock) and the date the securities were received. Of course it should also include whether the organization provided any goods or services in return for the contribution.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
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