Subject: Gifts of Stocks/Bonds

Date 01/05/10

PURPOSE:

To promote good donor relations, minimize commission expenses, and to streamline the processing of donated securities.

GENERAL:

The University of Maine System (UMS) uses one specific broker (E*TRADE Securities LLC) to sell securities. Development officers are authorized to work with donor brokers to coordinate the electronic transfer of securities. This will facilitate the prompt sale of donated securities and the provision of gift acknowledgements to donors. When securities have been received, UMS staff will sell the securities on-line using the E*TRADE website. Development officers should contact the Office of Finance and Treasurer (OFT) for specific stock trade details (e.g., date of transfer, net proceeds).

Because much time, effort, and expense is required to open accounts with other brokers for the sake of selling donated securities, donors should be encouraged to allow UMS’s broker to sell their gift. However, if a donor insists on using a broker other than E*TRADE, then UMS will honor such a request.

Development officers should ask donors if they would be incurring a loss or a gain upon sale of the security. If the donor would incur a loss, the development officer should suggest that the donor might receive a tax benefit by selling the stock and then donating the proceeds. If the donor would incur a gain, the donor would avoid capital gains taxes by transferring the stock to the campus. If the donors sell the securities, the commission is an expense to them. If UMS sells the securities, it is an expense to UMS. Donors should always be advised to consult with their tax or financial advisor concerning the tax implications of their gift.

The electronic transfer of securities is preferred to the receipt of certificates, since the sale process can be achieved more quickly and safely. The processing of paper certificates can take up to 2-3 weeks, whereas electronic transfers can be completed in a few days. To facilitate sales, development officers should provide donor brokers with the electronic transfer instructions for UMS’s broker.

Electronic Transfer of Securities

Most of the time, the transfer of securities will occur through the donor’s broker. The donor sends a letter to his/her broker asking that a specific number of shares be electronically transferred to UMS’s broker on behalf of a particular campus as a gift. The donor’s broker either calls or writes the campus to communicate the news of the gift.

  • The development officer should provide the donor’s broker with the DTC (depository trust company) transfer instructions for UMS’s broker (Exhibit I).
  • The development officer should instruct the OFT to expect a DTC transfer, the type and number of shares, the purpose of the gift, and the appropriate program number to be credited.
  • The Office of Finance and Treasurer will sell securities as soon as possible, but only after notification from the universities to expect a transfer and to explain the purpose of the gift.
  • After the securities have been transferred from the donor’s broker to UMS’s account (2-3 days), the development officer should contact the OFT to confirm the sale. The date of the gift is the day the donor’s broker transfers the security to UMS’s account.
  • The development officer should promptly provide the donor with a written acknowledgement of the gift as soon as the stock has been transferred to UMS’s account. The letter or receipt should include:
    • the name of the campus;
    • the date of transfer;
    • a description of the gift, including name of the company and number of shares;
    • the value of any goods or services (if any) the donor received as a result of the contribution, if applicable;
    • a declaration that gifts to the University are tax-deductible to the extent permitted by law (e.g., “This letter will act as your tax receipt. The full amount of your gift is a deductible contribution to the extent permissible by law. No goods or services were provided in exchange for this gift”).

The fair market value of the donor’s gift is the average of the high and low selling prices that the security traded at on the day of transfer. If it is desired to provide this information to the donor, the development officer should look up this information in that day’s stock tables (most newspapers report this information) or obtain the information from a financial website. A good website that contains historical high/low stock prices by day for many stocks is http://finance.yahoo.com/. Simply enter the trading symbol, click on “Get”, then click on “Historical prices”, below the “Last Trade” price.

The proceeds of the sale will be sent to UMS. Upon receipt of the funds from the broker, UMS staff will deposit the proceeds of the sale into the program number that was provided by the campus and send copies to the appropriate university. The campus gift processing staff will then enter the gift into the gift processing system (Exhibit II).

Gifts received in certificate form

If a donor hand delivers a properly endorsed bond or stock certificate, the date of contribution (and of valuation) is the delivery date. Donors should endorse security certificates only upon delivery to the campus.

If unsigned certificates are mailed to the campus, the contribution and valuation dates are the latest postmark date. As previously noted, the gift should be valued as the average of the high and low prices on the valuation date.

Certificate in name of individual or joint donor(s):
    • Make E*TRADE Securities LLC the Attorney to Transfer on the back of the certificate;
    • Have donor(s) fill out one Stock Assignment form (Exhibit III) per certificate;
    • Have donor(s) fill out and sign a Letter of Authorization (Exhibit IV) with Medallion Signature Guarantee stamps – one form per donor. A Medallion Signature Guarantee stamp will be placed on the document when an authorized individual, usually the donor’s broker or banker, witnesses the donor’s signature (this is similar to a notarization).
    • Write the University account number to be credited (5568-6868) on all forms and on the certificate(s).
Certificate in name of Revocable Trust:
    • Make E*TRADE Securities LLC the Attorney to Transfer on the back of the certificate;
    • Have trustee fill out one Stock Assignment (Exhibit III) form per certificate;
    • Have donor(s) fill out and sign a Letter of Authorization (Exhibit IV) with Medallion Signature Guarantee stamps – one form per trustee. The trust should be able to obtain a Medallion Signature Guarantee stamp from its broker or banker;
    • Send the entire copy of the Trust document to E*TRADE (see Exhibit I); • Write the University account number to be credited (5568-6868) on all forms and on the certificate(s).
Certificate in name of a Corporation:
    • Make E*TRADE Securities LLC the Attorney to Transfer on the back of the certificate;
    • Obtain and send to E*TRADE a Corporate Resolution Form (Exhibit V), signed by all corporate officers, dated within the past 6 months;
    • Have either the Authorized Agent or one officer other than the secretary fill out and sign one Stock Assignment (Exhibit III) form per certificate;
    • Have either the Authorized Agent or one officer other than the secretary fill out and sign a Letter of Authorization (Exhibit IV) with Medallion Signature Guarantee stamps. The corporation should be able to obtain a Medallion Signature Guarantee stamp from its broker or banker;
    • Write the University account number to be credited (5568-6868) on all forms and on the certificate(s).
Stock Donation from a Corporation (not a Certificate):

The transfer agent should re-title the stock and then send it over to the E*TRADE account.

Exhibit III provides a sample of a Stock Assignment.

Exhibit IV provides a sample of a Letter of Authorization. The Letter of Authorization should detail:

    • the number of shares of each stock given;
    • the corporation names;
    • the stock certificate numbers;
    • a statement stating that the donor is giving up full rights to the shares and is donating them to the campus.

The signature(s) on the letter must match the name(s) on the certificates exactly

The development officer should mail the Stock Assignment(s), Letter of Authorization, and any other applicable paperwork to UMS’s broker (see Exhibit I) separately from the stock certificates. All such paperwork should be sent by certified mail.

Each development office should keep copies of the stock certificates, Stock Assignments and Letters of Authorization. Stock certificates should be placed in a vault if they are to be held overnight. All donor signatures, whether they be on the back of the stock, on the Stock Assignment or on a Letter of Authorization, must appear exactly the same as the name on the stock certificate. If the stock is jointly held (more than one name appears on the stock certificate), all owners must sign the same Letter of Authorization and the same Stock Assignment or the back of the stock certificate using the same names as that on the stock certificate.

The development officer should then promptly provide the donor with a written acknowledgement and then inform the Office of Finance & Treasurer of the gift and the proper account number to credit, as described above.

The proceeds of the sale will be sent to UMS by UMS’s broker and, as noted, posted into the appropriate program. Sale confirmations and monthly statements will be sent to UMS. All associated paperwork should be retained at the campus where the gift was initially received.

Related Documents:

Policy 706 Acceptance of Gifts, Development Activities and Fund Raising Campaigns

EXHIBIT I Instructions for Electronically Transferring Stock

EXHIBIT II BENEFACTOR ENTRIES

EXHIBIT III STOCK OR BOND POWER OF ATTORNEY

EXHIBIT IV Sample Letter of Authorization

EXHIBIT V Corporate Resolution

For questions or concerns accesses the above forms, please call (207) 581-5846.

APPROVED: Vice Chancellor for Finance and Administration

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