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 the donor provides stock to satisfy all or part of their pledge, you may want to place a value only to reduce the amount of the pledge.
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.
In order to show the non-cash gift in a separate total, you'll need a new Category or Fund code that is 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 to allow for two separate totals on the statement while allowing the value to be deducted 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 was 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. Here is more information on how to Add Individual Pledges.
Add a Non-Cash Donation to Member Account
Non-Cash donations, such as stock gifts, are usually not entered with cash donations since the transaction is often handled by a third party, such as a broker, and the monies are directly deposited in 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 on 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 meet the IRS requirements for substantiating the non-cash gifts. However, some organizations may need to show a non-cash donation, such as a stock gift, on a donor's statement, which reduces a 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.
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