Nonprofits are taking advantage of the long-running bull market by encouraging donors to give stock instead of cash, the St. Louis Business Journal reported on June 5.
The St. Louis Art Museum sends pamphlets to donors pointing out the advantages of charitable remainder trusts, for example. Donors who give stock receive an annual income in return. Since the museum does not have to pay capital gains taxes on the sale of the stock, it provides a higher rate of return to the donor.
Nonprofits must pay the trading costs when selling stock. Some donors, however, are willing to cover the brokerage commission on the stock they give.
Nonprofits are starting to receive stock from smaller donors, said fundraising consultant Nancy Thompson. “It used to be the five or six figure donations were given in stock, but nonprofits are seeing more smaller donations of a thousand dollars or two in stock,” Thompson said.
As stock gifts become more common, more nonprofits maintain brokerage accounts to deal with stock gifts. Nonprofits are also learning to compromise with donors who want them to hold on to stock for a certain period instead of selling it immediately.
For full text of the article, go to the St. Louis Business Journal.