It is important that donors contact your organization so that you can assist with transfer instructions. If donors own securities in a brokerage account, be prepared to help them set up an electronic transfer of the shares to your organization’s brokerage account. If they possess actual stock certificates, advise them how to sign the certificates over to you and how to fill out a stock power form.

Assuming they are giving long-term (owned for 12 months or more) appreciated securities, donors will receive a charitable income-tax deduction equal to the fair market value of the shares. For common stock, this is typically the mean value on the date that your organization takes control of the shares. You will pay no capital gains tax. Gifts of stock are deductible up to 30% of adjusted gross income the year a gift is made. Any excess amount can be rolled over into the next tax year, for up to 5 additional tax years if the donors need it.

It is generally the policy to liquidate any donated stock shares very soon after receiving them, so that your organization can use the cash proceeds for the purpose the donor designates.

Some donors keep stock certificates in a safe deposit box or sometimes they might even keep them in a shoe box. Here’s what you do when a donor wants to make a charitable gift with the stock certificate that represent his or her ownership in a publicly traded company.

1. Instruct the donor to send the unsigned stock certificate to you in one envelope.
2. Instruct the donor to have his or her signature on a stock power form guaranteed. Typically, the donor will have to go to his or her bank to have the bank guarantee the signature for a transfer of a stock certificate. However, this is not always the case. Charities often have someone one staff who is a notary, and this person can also guarantee the signature of the donor.
3. Instruct the donor to send the signed stock power form in a separate envelope. Don’t put the stock certificate and the stock power form in the same envelope. This protects the stock certificate from being “negotiable” or transferable. The stock power is worthless without the stock certificate and an unsigned stock certificate can’t be transferred to another owner unless it is signed on the back.
4. You can also pick up these documents from the donor or have the donor deliver them to your charity. The most important detail of this gift is how the donor will deliver the stock certificate to you. The donor can hand you a signed stock certificate, but, we don’t recommend this because of the risk of losing the certificate.
5. Once your charity receives the stock certificate and stock power, take the documents to the finance director to acknowledge and sell.

Here is a stock power form in case you need one.