Donors may want the option to give through a non-cash method (i.e., stocks, gifts-in-kind, larger items like a car, etc.). However, the IRS does not want the non-profit organization receiving the non-cash donation to declare a cash value for the gift. For many customers, a letter or form that shows the date and description, such as the type and number of shares of stock, is all that is needed. Please check with the IRS or your tax consultant for how this letter or form should be written.
If your organization, for example, has a pledge drive and a donor provides stock to satisfy all or part of their pledge, you may want to assign a value only to reduce the pledge amount.
It's important that on the statement the value of the non-cash gift is NOT added to the cash total. Instead, it needs to be in a separate total.
To show the non-cash gift as a separate total, you'll need a new Category or Fund code set as non-tax-deductible. Even though we will set up this fund as non-tax-deductible, it is tax-deductible to the donor. This method is a workaround that allows two separate totals on the statement while deducting the value from the pledge.
Category Code
Go to General Settings → Giving → Giving Options and Categories and add a new Category at the bottom of the page (Category is a customizable term under the General Settings → Terminology tab). A recommended name could be 'Building Pledge - Non-Cash Stock Gift'. Uncheck the Tax Deductible box and click SAVE to add the new category to the list.
Add Non-Cash Category to Pledge Campaign
Occasionally, Non-Cash donations, such as Stocks, IRAs, Vehicles, or other Gifts-In-Kind, when received, need to reduce the donor's pledge. For that to happen, a Non-Cash Category has to be created and added to the Campaign Funds. Here are instructions on how to Create a Campaign.
Go to General Settings → Giving → Pledging and add the Non-Cash (non-taxable) Category Code to the Pledge Campaign as shown.
Add a Pledge to Member Account
Now that a fund is set and the pledge campaign has been updated, make sure the pledge is on the donor's record. A donor can use both Cash and Non-Cash donations to fulfill the same pledge. Learn more by visiting Adding Individual Pledges.
Add a Non-Cash Donation to Member Account
Non-cash donations, such as stock gifts, are usually not recorded alongside cash donations because the transaction is often handled by a third party, such as a broker, and the funds are deposited directly into the organization's investment or checking account. They can be entered in their own batch or directly on the donor's Giving page. Make sure to choose the 'non-cash' designated category when entering the donation. For more information, see How to Input or Edit Individual Contributions.
Create a new Giving Statement for Non-Cash Donations
Keep in mind that a letter to the donor will satisfy IRS requirements for substantiating non-cash gifts. However, some organizations may need to report a non-cash donation, such as a stock gift, on a donor's statement, thereby reducing the pledge balance. For more information on how to create a giving statement. Below is an example template along with a sample statement for cash and non-cash giving with a pledge.
Updated
