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Gifts of Stock

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A donor is interested in making a gift of stock to our nonprofit, but we don’t have a brokerage account. How can we accept the gift?

You may be tempted to wonder why not just have the donor sell the stock and then give the proceeds to the nonprofit. That is certainly an option, but often it is to the donor’s benefit to give the stock itself. For example, if the stock is worth more than when it was purchased, the donor avoids having to pay capital gains tax on the difference—and you get a bigger gift.

If your organization already has a brokerage account, the stock can be transferred directly. If not, you can look into opening one. That’s a particularly good idea if you expect to receive such donations frequently. A stumbling block, however, is that such accounts often have a significant minimum deposit.

If you don’t have a brokerage account and are not in a position to open one, organizations like the Community Foundation of San Luis Obispo County can help you. A charity itself, the Community Foundation can accept the gift, sell the stock, and pass the proceeds to your nonprofit.

This is also a good time to review your gift acceptance policy and make sure it is clear as to whether or not you accept gifts of stock and, assuming you do, what you will do with the gift. Often, it is best to sell the stock the same day it is received. Here are two good resources for more information on this topic:

Beginner’s Tips for Nonprofit Budgeting

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Creating the first budget for your new nonprofit? Or are you a new board treasurer and inherited a budget or budget process that really needs “upgrading?”

Monte S. Meyers, writing in Blue Avocado, provides some excellent, practical tips for involving the right people in the process, creating your budget, and monitoring it once it’s been adopted. Here are just a few examples:

  • Establish a clear budget development process. Who plays what part, and by when?
  • Develop a written set of “budget assumptions”—the information and thinking used to develop the numbers.
  • Use a budget spreadsheet or budgeting app that identifies each of the areas that make up your budget.
  • Be conservative in your revenue estimates.
  • When you can, enter realistic monthly numbers, rather than just dividing a total by 12.

Read Monte’s full article in Blue Avocado.

Do You Owe Sales Tax?

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As a nonprofit organization you may qualify for exemption from paying both federal and state income tax, but sales tax is a different matter. With some exceptions, a nonprofit’s sales and purchases are taxable. In other words, nonprofit and religious organizations, in general, are treated just like other California sellers and buyers for sales and use tax purposes.

For example, one of our local nonprofits held a day-long yard sale. All of the items sold had been donated to the organization for this purpose. Some members of the organization were surprised to learn that they needed to pay sales tax to the State of California based on the amount of their sales that day.

Some other examples:

  • Sales of food, meals, beverages, and similar items under a number of different circumstances.
  • Sales of tickets that buyers will exchange for food, beverages, or other physical products.
  • Sales of booklets, books, pamphlets, etc.
  • Sales of tickets for fundraising events when the ticket price includes amounts for food or beverages.
  • Sales of merchandise in Internet, live, and silent auctions.

Thankfully, the California Department of Tax and Fee Administration has published a guide specifically for nonprofits. Download your copy here.

Board Recruitment

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What’s the best way to find new board members?

While there is rarely one best way to do anything, when it comes to finding new board members a great way to start is to know what you’re looking for. Create a concrete list of traits or attributes you need to have represented on your board. You need to be strategic. You’ll hear this referred to as a board matrix. List desired traits, skills, and characteristics down the left column. In the top row, give each of your current board members a column, then check off which attributes each brings to the table. Basically, you’re doing an inventory of what you currently have “in stock” and identifying what you need to go find.

Knowing what you need makes it so much easier to know where to look! Need a lawyer? Talk to lawyers. Talk to people who know lawyers. Contact the local bar association. Need someone with lots of community contacts? Get acquainted with a member of a local service club. That person may not be interested but may well know someone who is. Share your specific need with your friends. They’ll have ideas.

Be aware that you don’t need a separate person for each trait. Often, you can find someone who will fulfill more than one need. For example, one board I served on wanted to have a lawyer on the board. Also, the board was mostly male “baby boomers” and wanted a better balance of perspectives. Through sharing their vacancy with people in the community, they found a female, Gen X attorney!

Here are some helpful resources:

Keep It or Toss It?

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Digital technology makes it so easy to create and store files. Over time, you can easily amass thousands of files (I have 26,443 on my laptop and counting). We don’t need all those files, and the more there are the harder it becomes to find the ones you do need. That’s where a document retention policy comes to the rescue.

There are files you want to keep. There are files you need to keep. The rest you can delete (or if they are on paper, shred and discard). A document retention policy tells you which are which and, for those you need to keep, how long you need to keep them. It’s also a policy that helps make sure you are in compliance with IRS regulations and keep your tax-exempt status.

If your nonprofit has not adopted a document retention policy yet, this is a good time to start the process. Familiarize yourself with the IRS regulations. Then, look at some samples and templates. Pick one that seems to best fit your organization and then customize. Finally, and most importantly, make sure everyone is familiar with the policy and follows it—including you!

Here are some good starting places:

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