A
Guide to Making Gifts of Securities to Clark University
If you have ever made a gift to Clark, you understand how important
your support is to ensuring that Clark can continue to provide the highest
quality education. But did you know that there are a variety of ways to make a
gift to Clark—some of which may be more advantageous to you than making your
gift in cash? One such way is to make your gift in the form of stocks, bonds, or
mutual funds. The procedure is simple. The staff in Clark’s Planned Giving
Office can take you through it step by step.
What are the Advantages of Making Gift of Securities?
If you want a gift of appreciated securities, you can avoid paying the
capital gains tax you would be liable for were you to sell the securities. You
can also claim a charitable income tax deduction for the stock’s current fair
market value, not just for what it was worth when you acquired it.
Gifts of securities work well for Clark, too. Because of the extra tax
advantages the donor receives by funding a gift with securities, many donors
find they can afford to make a larger gift than they originally planned.
How Do You Make a gift of Securities?
Making a gift of securities to Clark is simple. The steps involved differ
depending on whether the stock certificates are in your possession or in the
custody of your broker or banker and whether the gift is stocks, bonds, or
mutual funds. First, let us look at a gift of stocks or bonds in your
possession.
If you have the stock/bond certificate, simply mail them by first
class or registered mail to University Advancement Office, Clark University, 950
Main Street, Worcester, Massachusetts 01610. You should leave the back of the
certificates unsigned. Provide Clark with a letter of transmittal in which you
state your name and address, describe the certificates (company, number of
shares, certificate number), and specify that you wish to donate them to Clark.
You should also state whether you would like your gift to be used by Clark for a
particular purpose. Please note that many savings bonds are not transferable
during lifetime.
In a separate envelope, send us a signed stock/bond power. This transfers
the stock to Clark. Aside from the signature, leave the rest of the stock power
blank. We will fill it in when it arrives at Clark. It is helpful to include a
photocopy of the letter of transmittal with the stock power. Make sure the
certificates and the signed stock power do not travel together. Together
they are negotiable and could therefore be transferred by anyone to his or her
own name. There is also another form that needs to be completed – Deposit of
Certificate Registered in Name Other Than That of Customer. (Clark will gladly
provide these forms).
The signature on the stock power must correspond exactly to the name that
appears on the stock certificate. You should also take the stock power to your
broker or banker and ask him or her to guarantee your signature by signing and
stamping the stock power. This is
often referred to as “Medallion Signature Guarantee."
The date on the stock gift is the date of the postmark
on the envelopes, if the envelopes have two different postmarks; the gift date
is that of the last of the two envelopes mailed. The value of your gift is the
average of the highest value and the lowest value of the stock on the date of
gift. You can find this information on various on-line computer services. Clark
will also provide you with this information.
If your stocks or bonds are held by your broker or banker, there
is a different procedure for transferring them to Clark. Send the broker/banker
a letter saying that you wish to donate the securities to Clark University. It
is helpful if you send us a copy of the letter so that we may speak directly
with your broker/banker to facilitate the transfer process. In most cases, the
stock will be electronically transferred to Clark and for this to occur we must
provide your broker with certain account numbers. With this kind of a stock
transfer, the date of the gift is the date the stock is shown to enter Clark’s
account. This can be of particular importance to you at the end of the year. If
you are making a year-end gift, we recommend that you start the gift process
well before the end of December.
Starting the process early is particularly important when you are
donating mutual funds. The transfer of mutual funds from your account to Clark
University can take longer. Usually, we find that the best approach is for Clark
to open an account with the mutual fund company and have the shares transferred
to the Clark account. At this point the gift is complete.
Which Stocks are the Best Ones to Give?
Some securities may be a better choice to give than others. Consider
giving appreciated securities (stocks that have increased in value since you
acquired them) so that you can take advantage of avoiding the capital gains tax
for which you would be liable if you were to sell the stock. You should give
securities you have had for at least 12 months and a day. If you have had them
for less than that, you may only take their cost to you, and not their current
fair market value, as a charitable tax deduction.
You can also make a gift of stock in a closely held company. These gifts
are somewhat complicated, however, and you should discuss them with us and with
your financial adviser before you make the gift. This is particularly true if
the company is a Subchapter S corporation. One additional requirement with a
gift of closely held stock is that an appraisal value of the stock must be
obtained by the donor in order to take a charitable tax deduction.
Clark would also welcome gifts of depreciated securities (stocks that
have decreased in value since you acquired them). Making a gift of depreciated
stock may not be the best choice for you, however. There is no capital gains tax
to avoid. You might prefer to sell
the stock, claim the loss on your tax return, and make a gift of the cash
proceeds from the sale.
How Does the Charitable Tax Deduction Work?
When you make an outright gift of securities to Clark, you are eligible
for a charitable income tax deduction equal to the full fair market value of the
securities. If you itemize your deductions, you may claim that deduction on your
income tax return up to 30% of your Adjusted Gross Income. If your deduction is
for more than 30% of your Adjusted Gross Income in the year you make the gift,
you may carry over the rest of the deduction for up to an additional five years
(six years total). One additional note of caution: if you have a high income,
planning your gift of stock carefully can be particularly important as there may
be alternative minimum tax ramifications for a large charitable tax deduction.
What if You Still Need the Income Generated by the
Stock?
Increasingly popular forms of gifts funded with securities are life
income gifts such as charitable remainder trusts and gift annuities. Under such
arrangements, a donor makes a gift to Clark but continues to receive income for
life or a term of years. The donor designates who the income recipient or
recipients will be (usually themselves, a spouse or both). This is a good giving
vehicle for a donor who wants to make a gift to Clark now, but is uncomfortable
about giving up the income derived from the asset.
Stocks that yield little income but are highly appreciated can be
excellent choices for funding a life income gift such as a charitable trust, as
some or all capital gains taxes can be avoided. Gifts of securities for
life income gifts are sold and reinvested for greater return and
diversification.
Should You Talk with Your Lawyer or Other Financial
Advisor?
Clark has a professional staff that is well versed in the various aspects
of making charitable gifts. In addition, we have a law firm on retainer that is
nationally known as a leading authority on charitable giving and tax laws. We
are aware of when to seek this expert advice and we do so often. This resource
is also available to you as a donor to Clark. Our charitable giving counsel can
draft any of the documents needed to support your gift, free of charge to you.
In spite of the professional staff and the legal advice available to you
through Clark, it is important for you as a donor to make your own independent
assessment of whether you wish to make a particular gift and what its impact
will be on your financial and tax situation. For this reason, we encourage you
to consult your own adviser as part of the gift process.
Where Do You Get More Information?
To learn more about making non-cash gifts to Clark and how they can work
to your advantage, call or write us. We would be pleased to hear from you and to
discuss your particular situation. We are ready to help you understand the
various ways of making a gift to Clark and the different assets you can use to
fund a gift. We specialize in leading people step by step through the process,
and we are happy to make our services available to you without any obligation on
your part. For more information, contact Daniel
Petrocelli, Director of Planned Giving at 508-793-7593 or call Toll Free
877- 252 -7510.
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Contributions to Clark made new athletic facilities like the Dolan Field House and Granger Fields possible.