Non-Cash Gifts

Recording Non-Cash Gifts

This section provides tips for using the Donor and Gift Management module to record non-cash Gifts such as works of art or stock Gift proceeds. Refer to Entering Gifts for more general information about entering Gifts.

Note: For full, automated support of stock Gift processing, including the entire process of booking the security, communicating with the broker, and recording the sale, implement the optional Stock Gift Management module.

Note: You should give all non-cash Gifts a distinctive Gift Type code to make them easy to retrieve in reports.

Determining the Non-Cash Gift Value

• For non-cash Gifts, enter the value received in the Amount field on the Gift tab. Any subsequent gain or loss when the Gift is converted to cash will be recorded later.

  • The Donor's appraisal is often accepted as the Gift Amount for Gifts such as works of art, real estate, or personal property.

  • For publicly traded securities, the Gift Amount is usually set as the average of the opening and closing market values on the day the Gift was made, or (for some organizations) on the date of the Donor’s instructions to their financial manager. The opening and closing value information is readily available on the Internet.

  • Some organizations include the dollar value from the Amount field in the acknowledgement letters. Others prefer to acknowledge only the number and type of shares – feeling that valuation should be handled by the Donor and the IRS.

• The debit (asset) account for non-cash Gifts is often different than the default debit account. For example, you might have a special Stock Gifts in Transit account. If you are not using the optional Stock Gift Management module, this substitution must be made manually on the General Ledger tab before you posting the Gift.

Dealing with Hold Until Sold Issues

Many non-cash Gift issues involve Stock Gifts, and the various ways to record the difference between the original Gift Amount and the cash amount added to the Fund when the stock is sold. This difference is normally recorded as a Realized Gain (or Loss).

• Some organizations avoid differences in initial and realized Gift Amounts by holding their stock Gift transactions in Unposted Gifts until the sale is complete, and then valuing the Gift at the conversion amount for posting. This approach has several problems:

  • The Gift is unavailable for Gift History reports.

  • If a Donor Statement is printed in the interim, the Gift will not show up in the G/L activity or Gift Detail sections (without custom programming).

  • The actual value of the Gift is also arguably inaccurate using this method.

• Sometimes the stock is sold almost immediately upon receipt, so it is convenient to distinguish the Gift value from the gain/loss within a single transaction. If you do not have the optional Stock Gift Module, you can accomplish this by doing the following:

  1. Enter the contribution value in the Amount field.

  2. Enter the gain or loss in the Non-Gift Amt. field.

The non-Gift amount is the difference between the value and the net proceeds and will automatically be given a Non-Gift distribution line.

3. Enter the appropriate Debit and Credit accounts on the General Ledger tab. The Non-Gift credit account should be Realized Gain / Loss, rather than the Gift revenue.

   Entries to Realized Gain / Loss are made with the G/L Journal Key GI and can be distinguished from those entered from FACTS (FA) for audit purposes. You could also create an additional G/L account for this purpose. If you change the G/L Journal Key to GJ, these non-Gift amounts will arrive in FACTS with a Transaction Type of MscP, rather than GifP.

   • It is possible to post the Gift with a zero value, and then to perform a Gift adjustment to the amount of the sale. The Gift Detail section of the Donor Statement can optionally print the Gift Comment (for example, 100 shares of Cisco Systems), with no value. This can be a nice addition to the Donor Statement even if the Gift is given a dollar value.

Refer to Adjusting Gifts for more information on performing Gift adjustments.

Post to a Holding Account and Recording Gains / Losses in the General Ledger Journal

Before you can use this method, you must create a new asset account (for example, Stock Gift in Transit).

1. On the Gift tab, use the Type field to mark the transaction as a stock Gift.

2. On the General Ledger tab, substitute the default deposit account with the Stock Gift in Transit account.

3. When the stock is sold, make manual General Ledger journal entries.

   • The cash amount of the sale is debited to the normal investment account for the Fund.

   • A credit is made for the full original value of the Gift to the Stock Gift in Transit account.

   • The difference between the two values is made up with a debit (loss on sale) or a credit (gain on sale) to Realized Gains/losses.

Variation to this Method

If your give the stock to a brokerage account within the pool, you can debit the pooled asset account directly from the Gift record. This method still allows you to enter the gain or loss into the General Ledger journal on behalf of the recipient Fund.

Note: There is a minor issue of equity to the other pooled Funds in this case, because the assets in the recipient Fund’s pool are inflated in the interim until the stock is sold – but those assets are not earning in returns for the pool.