Considering stock donations can be an intimidating concept. Stock donations, along with other non-cash gifts like cryptocurrency can seem complex and far removed from the simplicity of cash or check donations. However, understanding the potential benefits and the necessary steps to facilitate these kinds of contributions can significantly enhance a church’s ability to fund its mission.
Why Stock Donations Matter
The average American’s wealth is increasingly found in non-cash assets like stocks. In some cases, stock options or grants even form part of a person’s compensation package. By limiting donation options to cash, checks, or credit cards, churches may unintentionally restrict their congregation’s ability to give, especially when they want to contribute from their stock holdings.
Not to mention, there are significant tax advantages to donating stock. For example, if a stock that was purchased for $10,000 has grown to $20,000, the donor would typically be responsible for paying taxes on the $10,000 gain if they sold the stock. However, by donating the stock directly to a nonprofit, the donor avoids capital gains tax and gets a potential tax deduction, and the church receives the full value of $20,000. That’s an overall win-win scenario!
How to Accept Stock Donations
Accepting stock donations does require a bit more effort than traditional methods, but the potential benefits are worth it!
Churches often have a member or two who work in the area of finance and investments and could facilitate the transaction.. We recommend inviting these members to help set up the necessary processes for accepting non-cash donations. Additionally, companies like Overflow can simplify the process by providing an app through which donors can easily give stock. By implementing these kinds of systems, churches can unlock greater giving potential from their congregants.
Setting Clear Policies
It is so important for churches to establish clear policies around how they will handle stock donations. At some churches, the policy might be to sell donated stock immediately to avoid the risks associated with market fluctuations. Other churches might choose to hold onto the stock, depending on their financial strategy and risk tolerance.
Both of these options are great, but these decisions should involve the church’s pastors, financial committee, and other leaders with financial expertise. Tools and guidance are available from organizations like Clergy Advantage, which can help churches create sample policies tailored to their needs.
Additionally, churches should ensure that multiple people are involved in the stock donation process to maintain accountability. As we like to say at Parable, “two sets of eyes”. For example, if a member handles the transaction, another should oversee it and manage donor receipts to prevent any potential misuse of funds.
Communicating with Your Congregation
Once your church is ready to accept stock donations, it’s important to communicate this option to your congregation. This doesn’t necessarily mean detailing the entire process during every service. That could be a bit overwhelming for people.
Instead, mention the option during financial stewardship classes, in town hall meetings, and at strategic times like year-end giving campaigns or building fund drives. Also, ensure that stock donation options are clearly listed on your church’s giving page and/or app.
Regular communication about the availability of stock donations can help congregants consider giving in new ways. By making this option visible and tying it to specific needs or campaigns, churches can encourage their members to think about how their broader wealth, not just their cash on hand, can support the church’s mission.
Working with Bookkeeping and Accounting
From a bookkeeping and accounting perspective, handling stock donations requires clear communication and meticulous record-keeping. For example, if a significant stock donation is intended for a specific purpose, like a building fund, it’s important to communicate this to your bookkeeping team. Otherwise, the donation might be mistakenly categorized as general tithes, which could disrupt the church’s financial planning and budgeting process.
Engaging with professional bookkeeping services, like those provided by Parable, can help ensure that all financial records are accurate and that donations are correctly allocated according to the donor’s intentions.
Recap
Accepting stock donations might initially seem daunting, but with the right policies, processes, and communication, it can be a valuable way for churches to increase their funding. By opening up new avenues for generosity, churches can better support their mission and enable their congregants to contribute in ways that align with their financial reality and tax planning.
Whether your church decides to work with a company like Overflow or set up its own systems, the key is to consider the full scope of wealth that God has provided to your congregation and to provide clear, accessible ways for them to give generously.