It is not that you do not assign a value to it.  You do - internally on your database system and in finance there is a value and you would even use the same formula used by the IRS that donors use.  I just do not recommend putting that value on the acknowledgement as I feel that IRS publication 1771 is clear.

For pledge payments you may choose to send a separate letter to them (not on the receipt but potentially mailed together) stating their original pledge amount, the amount you are internally using for the stock value, their outstanding balance and their next payment due date.

To further what Melissa is saying, you should never simply accept what the donor (or the donor's broker) values the stock at. I have had more than one occasion where the donor told their broker to transfer the stock on one day, yet the broker didn't get to it for a few days, and the stock value has changed between those days -- which is an issue between the donor and his/her broker. We value (internally) the stock on the day we take possession of it (or that the rights of it have transferred to us) and the acknowledgement letters state "XX shares of ZZ stock on MM/DD/YYYY". And yes, a separate letter regarding their pledge balance is a better way to proceed if their stock gift is paying a pledge.

I agree with what Marla and Melissa said.  Marla's example of change in value of stock has happened to us too. 

A separate letter for the pledge balance is what we do for multi-year pledges or those with a balance.

Also, not having to include $ values in our donor receipt, means we are not responsible should there be an error - typo or incorrect figures from broker.

We also have stock givers who want to know the balance after their stock gift.  Our letter tells the donor the gift date, high and low value and what our proceeds were after the sale and what their pledge balance is and encouraging them to remit the balance for that period of time to keep them on the same schedule.  Obviously this is usually different than the "value" the donor can take on his taxes.  We use language telling the donor to check with his tax advisor for the value to use.   I hope this helps.

Susan,

Do you not apply the full value to their pledge?  It sounds like you only apply the amount that you got from the sale which I have never heard of doing.  In fact, I would never even tell the donor what the proceeds were after a sale.  That is internal financial information.

IRS pub 1771 is pretty clear, as some have stated, that you are to include a description of the gift (number of shares) but not the "value".  But it does seem reasonable to include language to ensure that the donor and institution are on the same page as to how much the gift is really worth (particularly when the gift is a pledge payment).  We say, "Thank you for your gift of XXX shares of XXX stock" and below that in parentheses "(recognition credit of $1,123.45").  Thus we are not stating what the value of the gift is, but are providing the number that we have entered in the database, against which they can compare their records/understanding of the valuation.

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We actually spent a considerable amount of time on this issue last year and a little bit of money with our attorney to come up with our letters.  We based all of this on the fact that the IRS says you should not include the value of the stock in your communications and that it is the donor's responsibility to place a value on the stock for IRS purposes.  However, the development team wanted to provide the information under the auspice of stewardship.  The letter begins with how many shares of what stock and then states:

The Internal Revenue Service requires only that we acknowledge receipt of your contribution as described above.  You should consult with your tax advisor to determine the value of your contribution for tax purposes.  However, to the extent it may be useful to you for planning purposes and determining any additional recordkeeping or filing requirements you may have, we valued your contribution for our internal accounting purposes as follows.  Using the sources available to us, we calculated the mean stock price on __________ (date) to be _______ (median) per share (based on a high of _______ (high) and a low of _______ (low)), making the value of the gift for _______ (#) shares «Amount». 

The date of the gift is the date on which the donor relinqushes control of the property, not the date on which you receive it.  So if the donor gave the broker written instructions to transfer it to you on April 3, but the broker did not do so until April 7, the date of the gift is still April 3.

Pamela Richard:

The date of the gift is the date on which the donor relinqushes control of the property, not the date on which you receive it.  So if the donor gave the broker written instructions to transfer it to you on April 3, but the broker did not do so until April 7, the date of the gift is still April 3.

THANKFULLY the IRS does not even want us to deal with gift date for this reason and never put a date (or a value) on gift non-cash gift acknowledgements.  The donor can use whatever date they want to and will have to live with the consequences in an audit.  Internally we can use whatever value we want but I believe FASB and GAP would want your finance office to use the value on the day it became your asset (the 7th) - an accountant can speak up and say so if they believe I am wrong.

Melissa is dead-on on this one.

The organization receiving the gift must have control of the asset, a clear transfer of property, for FASB and GAP.   Not to mention that it is dumb for the stock broker to not transfer it immediately.  The only situation that that might not happen is if the donor transfers it on the Friday before a holiday weekend towards the end of the day. 

We're currently dealing with a similar scenario because we've been gifted gravesites that were originally sold to the donor by a Funeral Association that no longer exists.  Our accountants and auditors are going crazy because we can't show control of the asset or a clear transfer of property to be able to sell them or use them.  Not to mention that because we are talking about it, I will get a stock transfer this afternoon at 4:00 pm.

Our board's policy is that gifts of securities be liquidated immediately upon receipt. However, Merrill Lynch has not complied, citing their alleged inability to detect a gift dropping into our account. And since donors do not necessarily give us a heads-up that a gift is on its way, a block of shares may be transferred to us and sit there in our ML account. Worst case, sit there for weeks! From time to time we have actually lost value, as share prices have declined. Naturally, the donor wishes to transfer to us at a price peak in order to harvest the appreciation, so loss of value due to a delayed sale is a likely scenario. Maddening! I'd rather not dissuade the donor from future transfers, so I tend to echo the average of the high and low on the transfer date, multiplied by number of shares transferred, and let it go at that.

And yes, we have said adios to ML and moved our business to a vastly more customer-friendly firm in our local community.

We also have a standing order with our brokers to immediately sell the stock and have often had problems with each of them inadvertently holding onto it for a period of time.  That seems to be an industry problem.

When you talk about the value that you put on things...I'm curious to know if others do it this way too:

We enter the median on the day the donor transferred possession as the gift date.  This is considered the gift amount and this is the amount that is applied to the pledge.  When we sell the stock in RE, we enter the sale amount (the amount we ultimately receive).  The entries that are then sent to Financial Edge are the cash amount we received, the brokerage fee and the gain/loss which will all total the amount of the gift.  There is almost always either a gain or a loss.

If you are entering something different in the gift amount, are you not "selling" the stock in RE?  Do you have your funds set up with GL distributions to realize the gains and/or losses?

Cindy - we do exactly as you do.

If there is a delay in your own broker sellign the stock that is for you or your finance office to deal with but it is still your asset the day it is in your account and therefore has a gift value from that first day.

Our policy is to sell the stock immediately unless it is not a publicly held stock, something that we need to find a buyer for.  We did have problems with the broker not notifying us.  We changed brokers and added a direction sheet into each pledge letter for the larger gifts about how to do a stock transaction.  The unknown stock still happens, but not as much.

We give the donor the full amount of the gift based on the median for the day of transfer in RE.  We treat it as Pay-Stock/Sold.  We don't have Financial Edge; we have Great Plains, so I send the data down to Finance for posting.  When I send the data down, it is adjusted to show the amounts we received, the gain/loss and the fees and we enter notes on the gift as to what the breakdown was for everything.