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Gifts of Mutual Fund Shares and U.S. Savings Bonds

The first time I received a gift of mutual fund shares I thought “Yea!” and set about liquidating the gift in the same way I would process a gift of appreciated stock.

NOTE! I neglected to mention something very, very important in yesterday’s blog about stock gifts.  Each and every time you receive a gift of stock, you and your organization want to instruct your broker to sell the stock immediately and transfer the funds to your account.

There are no “ifs, ands, or buts” about this.  It should be an ironclad rule at your organization and your broker should know your wishes upfront.

Some brokers will accept an “automatic sell” instruction from you.  Others will need you to give the instruction each time.  Regardless, sell the stock.  You have no idea whether the value of the stock will go up or down.  The intention of the donor was to gift you an approximate dollar amount in the form of the stock.  If the stock declines in value you have gone against your donor’s wishes and that is a bad thing.

Always sell gifts of stock right away.

Okay, back to mutual fund shares.  Here’s what you need to do.

The donor, or someone at the company holding the mutual fund shares (Fidelity, Schwab, etc.) will contact you and advise you of the gift.

At that time, you need to open an account AT THAT COMPANY.  Once you have been advised the account is open, instruct the company to move the mutual fund shares to your account.

Then, once that has been accomplished, instruct the company to liquidate the shares and send you a check.

Now, HERE IS THE REALLY IMPORTANT PART: Opening an account is a bit of a pain.  So only do it once!

The great likelihood is that if you ever receive a gift of mutual fund shares it will come from Fidelity, Schwab, or perhaps 2-3 other companies.

Once you have an account at that company, keep it open!  Keep $100, or $50 in the account.  That way, the next time you receive a gift of mutual fund shares from a donor who has their account at that company, the process will be so much easier for you.

Valuing the gift of mutual fund shares is pretty much the same as for stock.  You tell your donor “on (date) you gifted us X shares of (name of fund).” And then you go on to thank the donor in a sincere way.

Because the process moves more slowly than with a gift of stock, the donor should value the gift on the date they made the instruction to the company. That is, when that asset left their control.

You value the gift on the date it finally gets to your account.

Now, here is another really important thing about gifts of stock and mutual fund shares, both.

For both, you are selling the stock/mutual fund shares and someone is sending you a check for the proceeds.  Your finance office will set a value for this based on the amount of the check.

You do not do this.

As we’ve said before, you value the gift based on the value the day it came into your account.

It sounds odd to say, but it is common knowledge that the Finance Office and the Development Office keep two different sets of books.  This is a perfect example of why this is so.  In the relationship you develop with your CEO and your CFO you will explain why this happens and they’ll understand.

If not, show them this.

The two priorities are to keep the account open for future gifts from that company and to thank the donor, as always, in a personal and sincere way.

There.  Now you know about mutual fund shares.

Down the road a bit, we’ll talk about the rare occasion when a donor wants to make a gift to you of U.S. Savings bonds.  Aagh.

Okay, I can tell you now.  No matter how badly they want to make that gift, they can’t.  It is not allowed.  Bottom line, the donor has to redeem the Bonds, pay any tax due, and then make a gift to you of cash.  The donor won’t want to hear this, but ‘dems the rules.

Have a good day, my friends.

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