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Stocks, Bonds & Mutual Funds

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Glossary

Definition
A gift of all rights of ownership to a marketable security, generally easily valued on a major exchange.

Further Information
A gift of a security, as opposed to a gift of cash, may provide additional tax and financial planning benefits. Gifts of securities include stocks, bonds and mutual funds. Publicly traded securities are easy for Clarkson to receive and use.

Securities are gifted to Clarkson usually in one of three ways:

  1. In person. The donor or the donor’s agent delivers the unsigned stock or bond certificates (still registered in the donor’s name) to Clarkson or to an authorized representative of Clarkson, along with one signed Stock/Bond Power Form per certificate. Note: The donor’s signature on the Stock/Bond Power must be “guaranteed” through a brokerage or a commercial bank, not a Notary Public.
  2. By mail. The donor sends the unsigned stock or bond certificates (still registered in the donor’s name) to Clarkson in one envelope. In a separate envelope, the donor sends one signed Stock/Bond Power Form per certificate. Note: The donor’s signature on the Stock/Bond Power must be “guaranteed” through a brokerage or a commercial bank, not a Notary Public. Mail both envelopes via certified U.S. Postal Service to:
    Office of Philanthropy
    PO Box 5515
    Woodstock Lodge
    Clarkson University
    Potsdam, NY 13699
  3. By electronic transfer. Clarkson University accepts gifts by electronic transfer to its account at:
    Morgan Stanley Smith Barney
    65 Market Street
    Potsdam, NY 13676
    Contact: James Theodore, 315-265-6300 or 800-722-0226
    Clarkson's Taxpayer ID#: 15-054-3659
    DTC Participant #: 0015
    Account #: 834-105842-070
Please notify Clarkson when initiating a DTC transfer, as your name is not included with the transfer. Contact the Office of Donor Relations 315-268-7709 or e-mail agrant@clarkson.edu.

NOTE: The instructions for electronic transfers to Clarkson gift annuities, trusts and pooled fund are different than above, and require specific account information.
Contact the Annie Clarkson Society at 315-268-7778 (toll-free 1-877-928-4438) or e-mail sal@clarkson.edu for help.

The process for donating interests in a mutual fund may be different than above. The donor should contact his/her broker or fund administrator for specific instructions. Please note that gifts from mutual funds often take several weeks to process through the fund before the gift is made to Clarkson.

Your employer may match your gift to Clarkson.
 Visit our Matching Gift page to find out if your employer will match your gift, and how to initiate the process.

Gifts of securities may count in the Evolution to Excellence fundraising campaign, in your next anniversary reunion, and towards Roundtable annual recognition. Contact the Annie Clarkson Society for help related to your unique circumstances.

Tax and Financial Implications
Donors most often gift appreciated stock they have owned long term. If a donor itemizes, this may allow the maximum deduction on the donor’s income tax return. In this scenario, the donor does not need to declare any capital gain, and may be entitled to deduct the full fair market value of the security up to 30% of his/her adjusted gross income (AGI). For example:

      A donor purchased a block of stock two years ago for $8,000. The stock is gifted today at a market value of $10,000. The donor does not declare capital gain of $2,000 and thus saves $300 (15% x $2,000). The donor is eligible to itemize a $10,000 charitable deduction for a savings of $2,800 in a 28% tax bracket. Thus, the donor receives a net tax benefit of $3,100 on a gift that originally cost $8,000.

Sometimes a donor may wish to gift an underperforming stock that has depreciated. In this circumstance it is often recommended that the donor sell the stock first, and then contribute the cash proceeds to Clarkson, thus allowing the donor to also declare the capital loss on his/her income tax return.

If you itemize on your federal income tax return, gifts of long term, appreciated stock to Clarkson may be eligible for a deduction up to 30% of your AGI. Excess gifts may be eligible to be carried forward for up to five additional tax years.

If a donor makes a gift of stock held short term, the charitable deduction is limited to the cost basis of the stock, but that value is deductible up to 50% of the donor's AGI. This may be useful to a donor when the market value is very close to the cost basis of the stock. A donor may elect to deduct cost basis on a stock held long term for similar reasons.  Such an election may impact the deductibility of other gifts.  You should consult your tax advisor before making your gift.

It is important to determine an accurate gift date when making a gift of securities. In general, the date of your gift is the date that your asset passes out of your control to Clarkson. For example, the gift date is not the date you sign the stock/bond power, but the date that you give the certificate and the stock/bond power to an authorized representative of Clarkson. For gifts mailed through the U.S. Postal Service (USPS), it is the later postmark date on the envelope containing the certificate or the stock/bond power. Care must be taken when gifts are mailed at the end of December. It is possible to use other carriers (e.g., FedEx, UPS) to deliver a gift, but federal law places restrictions on the types of services that may qualify, so the safest course of action may be to use the USPS. A gift by electronic transfer is complete on the date the transfer is made successfully, and not the date you give instructions to your broker for the transfer to be made.

A publicly traded security is valued for gift and tax purposes as of the gift date. For gifts of stock, the value is determined by taking the mean (average) of the high and low values of the security on the gift date and multiplying that value by the number of shares gifted. For example:

      An electronic transfer of 100 shares of stock is completed on June 20. On June 20, the high value of the stock was $67.48 and the low value of the stock was $65.00, therefore the mean (average) value of the stock on June 20 was $66.24. The value of the gift is $6,624 ($66.24 x 100 shares).


Note: Determining the amount of the income tax charitable deduction for gifts to gift annuities, trusts and the pooled fund is unique to each gift circumstance. Contact the Annie Society for further information.

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This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisors and Clarkson University before making or planning your gift.  (rev 3/2014)