How to Record Stock Donations (Gifts of Securities)

This guide shows a simple, reliable way to record stock gifts in Connection Card Pro—capturing the donor’s gift for contribution statements, recognizing the asset, and recording any realized gain/loss when the shares are sold.

1) One-time setup (before you accept stock)

A. Add accounts in your Chart of Accounts
Go to Accounting → Financial Settings → Chart of Accounts and create:

1. Asset (Register) – Investment/Brokerage account
   (This should represent your actual brokerage account you use for receiving stock)
   
   • Type: Asset (enable “register”).
   • Example: 1900 • Investment Account
2. Income – Contributions (or Stock Contributions)
   • Example: 4000 • Contributions Income (or create a separate 4010 • In-Kind Stock Contributions if preferred).
3. Gain/Loss – Realized Gain/Loss from Investments
   • Example: 4990 • Realized Gain/Loss from Investments (income/other income; negative amounts will reflect losses).

These three accounts support the full life-cycle: accepting the gift, holding it, and recording proceeds when sold.

2) Record the donated shares (the non-cash gift)

You’ll record the donation into the Investment register so Connection Card Pro tracks the asset and ties the gift to the donor for tax statements/pledges.

1. Go to Accounting → Registers, open your Investment Account register.
2. Click New Deposit/Donation.
3. Complete the entry:
   • Fund: Choose the appropriate fund (e.g., General Fund).
   • Entry Memo: Describe the gift clearly, e.g.:
     Donated Stock – NYSE:USB, 1,000 shares, FMV 45.25
   • (Optional) Attach files: brokerage statement / gift letter.
4. Add one line item:
   • Payer/Donor: Select the donor (for contribution statements/pledges).
   • Account: Select your Contributions Income account (or Stock Contributions income account).
   • Amount: Enter the fair market value (FMV) you’re recognizing for books (commonly the average of the high/low on the gift date or broker’s stated value).
5. Save.

Result:

• Your Investment asset increases by FMV (you “own” the shares).
• The gift is credited to Contributions Income and tied to the donor for receipting.
• The donation shows on contribution reports and can apply to pledges.

3) Record the liquidation (when the broker sells the shares)

When the broker sells the donated shares and sends cash to your bank, record two things in one deposit to the bank:

• Move value out of the Investment asset.
• Recognize any realized gain or loss (difference between sale proceeds and the carrying value you used in Step 2).

1. Open your Bank register (e.g., Checking) → New Deposit.
2. Complete the header:
   • Entry Memo: e.g., Liquidated Donated Stock (NYSE:USB, 1,000 shares)
   • Total Deposit (Target): Enter the net cash received in the bank (after broker fees, if any).
3. Add line rows:
   • Line 1 – Move out of Investment
     • Account: your Investment Account (asset).
     • Amount: the carrying value you recorded for the gift (the FMV used in Step 2).
     This line reduces the Investment asset and explains the cash source for the bank deposit.
   • Line 2 – Realized Gain/Loss
     • Account: Realized Gain/Loss from Investments (income account).
     • Amount: Proceeds – Carrying Value
       • If proceeds are greater than carrying value → enter a positive amount (gain).
       • If proceeds are less than carrying value → enter a negative amount (loss).
4. Confirm the line totals exactly equal the bank deposit amount (proceeds).
5. Save.

Example:

• Carrying value (Step 2 FMV): $18,500.00
• Broker sold for cash proceeds: $18,567.00
• Gain = 18,567.00 – 18,500.00 = $67.00

Investment Account ………………… $18,500.00
Realized Gain/Loss ………………… $67.00
Deposit Total ……………………… $18,567.00
  

4) Tips, variants & FAQs

• Broker fees: If the broker nets out fees, your proceeds already reflect them. If fees are listed separately, add another deposit line to an Expense account (e.g., Brokerage Fees) so the lines still total to the bank deposit (you can also add a separate expense entry to account for the expense).
• Partial liquidation / multiple sale dates: Repeat the Step 3 process for each sale, using the correct proportion of carrying value and recognizing gain/loss each time.
• Dividends received before sale: Record a normal Deposit to Bank with Account = Investment Income/Dividends (or a similar income account).
• Donor-advised funds / third-party liquidation: If the donor’s broker liquidates and your org only receives cash, skip Step 2 (no asset ever held). Simply record a normal donation deposit to Bank to Contributions Income tied to the donor/DAF.
• Pledges: Because Step 2 ties the gift to the donor, it can apply to pledge tracking like any other donation.
• Internal value vs. receipt wording: Many nonprofits record FMV for internal accounting but issue receipts that describe the property without a stated value (per local rules). Confirm with your accountant.

Quick checklist

• [ ] Investment/Brokerage Asset register exists.
• [ ] Contributions Income account available.
• [ ] Realized Gain/Loss account available.
• [ ] Record donation as a Deposit in Investment register to Contributions Income (payer = donor).
• [ ] Record liquidation as a Bank Deposit with lines to Investment (carrying value) and Gain/Loss (difference).
• [ ] Attach broker statements to both entries for audit trail.

You’re all set—Connection Card Pro will now track the asset, the donor’s contribution, and your realized gain/loss cleanly end-to-end.