Donating securities online

By Todd Cohen

Barbara K. Robinson, a breast-cancer survivor in Hermosa Beach, Calif., wanted to make a gift of $2.5 million to $3 million to Long Beach Memorial Medical Center to establish a breast-cancer research program.

Robinson was ready to write a check, but Jim Normandin, president of Memorial Medical Center Foundation, suggested she might find it more advantageous to donate appreciated securities.

He also suggested she make the gift through the Caritance Foundation in Fredericksburg, Va., which has launched a donor-advised securities program at that lets donors, charities and professional advisers assisting them contribute publicly-traded securities to qualified charities.

Based on a plan he worked out with her, Robinson’s investment adviser used the Caritance Foundation’s new online tool to transfer 33 issues of appreciated stocks totaling $2.7 million to a donor-advised fund she established to the research program.

The day after they were entered into its online tool, which produced a letter of authorization that permitted their transfer into its brokerage account, Caritance sold the stocks and transferred the net proceeds into the medical center foundation’s account.

By using securities to make the gift, Robinson avoided taxes on more than $1 million in capital gains, Normandin says.

“I see Caritance allowing the donor to take command of the situation and basically, at their keyboard, make a gift,” he says.

The website of the Caritance Foundation, which says Robinson’s gift is one of the largest ever transferred over the internet, was developed and is hosted for free by AssetStream, an online service owned by the Planned Giving Design Center in Matthews, N.C., that handles and helps nonprofits market and process gifts of securities.

The website provides information and resources donated by AssetStream and the Planned Giving Design Center that are designed to help donors learn about donating appreciated securities, calculate and compare the tax benefits of donating securities, select the most advantageous securities to give, and donate them to charities they choose.

Donors can give stocks, bonds, mutual funds and listed options by completing a secure online form, including information about the charity that will receive the gift, the security to be donated, and where the security is held.

An automated system then produces a letter of authorization that the donor or the donor’s adviser prints out, signs and returns to the foundation’s gift-processing center by email, fax or mail.

The securities then are transferred to the foundation and sold on behalf of the charity.

After determining whether the charity the donor selects is a public charity in good standing with the Internal Revenue Service, the foundation delivers the net cash proceeds to the charity in the form of a grant.

Donors can be identified to the charity or, if they wish, remain anonymous.

And when the gift is completed, the foundation sends the donor a gift acknowledgement and gift-valuation report for tax-deduction purposes.

The foundation retains a fee equal to 3 percent of the first $50,000 of the gift, or 6 cents a share, whichever is greater, but not more than 3 percent of the total gift.

In addition to serving as a “pass-through” organization that handles gifts of stock, and transfers them to charities designated by the donors, the foundation aims to “educate donors and promote their awareness about how best to be a philanthropist,” says Lynda S. Moerschbaecher, a lawyer and consultant in Carlsbad, Calif., who advises nonprofits and donors and serves as the foundation’s president on a voluntary basis.

The foundation, for example, already offers donor-advised funds, and expects to launch new services that might include accepting or transferring closely-held stock and gifts for real estate, she says.

“We want to help people move from being donors to becoming philanthropists,” she says. “If they’re educated about how to give, they can give far more and create far more benefits in the charitable community than they ever imagined.”

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