Railway Preservation News

Donations of Stock to a Museum
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Author:  JimBoylan [ Tue Dec 03, 2013 4:53 pm ]
Post subject:  Donations of Stock to a Museum

Have any of the railway and trolley museums in the U.S. of A. been able to accept donations of actual corporate stock certificates from members or the public? Have they been able to arrange the details themselves, like real museums and charities do, without getting robbed on commissions and fees?
In some cases, the U.S. Internal Revenue Service will allow a tax deduction for the full value of donated stock on the day the charity receives it, even if the purchase price was much less. Real charities like the Red Cross or the Art Museum have accountants and stock brokers on their Boards who know what to do and make it easy, and sometimes even donate or discount their assistance.
If the donor sells the stock himself and gives the money, he pays income tax on the gain from the original purchase price.
I want to donate paper stock certificates that I own in my name and bought cheap a few recessions ago. In the past, the Branford trolley museum has only received electronic book entry stocks held at a brokerage in Street Name, and had the donor's broker do most of the work.

Author:  Les Beckman [ Tue Dec 03, 2013 7:21 pm ]
Post subject:  Re: Donations of Stock to a Museum

Jim -

When I first saw the subject of this thread, I thought it was about the donation of a Stock Car to a museum! Dang, I thought. We need a stock car at HVRM! Then read your entry. Well, I hope you get an answer to your question, even if I'm disappointed in the subject.


Author:  Heavenrich [ Tue Dec 03, 2013 8:47 pm ]
Post subject:  Re: Donations of Stock to a Museum

JimBoylan wrote:
Have any of the railway and trolley museums in the U.S. of A. been able to accept donations of actual corporate stock certificates from members or the public?

Most 501c3s can do this.

You're doing something very generous and the good news is it's easy to do ....

If the organization receiving the stock has a brokerage account and if they have an office near where you live, you may be able to hand carry the certificates to them and get them processed. Otherwise you may have to open an account somewhere and get the certificates deposited and then make the donation.

These days, few people hold actual stock certificates.

As you pointed out, the advantage of donating the stock is you don't have to pay capital gains, don't have to pay a commission to sell the stock and get the full value for the donation.

You should also be sure the transaction is properly documented.

There also are ways, under certain circumstances, where donations can be made from IRAs.

Bob H

Author:  softwerkslex [ Tue Dec 03, 2013 9:20 pm ]
Post subject:  Re: Donations of Stock to a Museum

You don't want to hold paper stock certificates, ever. They are obsolete.

The problems you run into after fire, theft, or death in family are multiple. Plus, if the company ever starts to fail, you will have a time delay trying to sell the shares.

If you die with shares in the file cabinet, who is going to know they are there?

Been there, done that in my family.

Author:  wesp [ Tue Dec 03, 2013 10:17 pm ]
Post subject:  Re: Donations of Stock to a Museum

We received a very generous donation of stock at NCTM in 2003 after the fire. A friend who was a broker handled the transfer arrangements for us. It was very easy to do. An experienced broker should also be able to handle transfer of paper shares as well. You may want to convert your paper shares to book entry in your name first and then make the transfer.

Courtesy of Google:

Converting Paper

Paper stock certificates can be converted into book-entry accounts. This generally involves delivering the certificates to your broker with a request to add them electronically to your account. You may have to sign the certificates in order to make the conversion. Your brokerage may also have its own specific forms or procedures for the conversion process. Check with your broker for details.

Transfer Agents
Some stock owners deal directly with transfer agents, which are firms that manage a company's stock transactions, rather than brokerages. A transfer agent keeps a record of all shareholders of a company's stock and the number of shares each shareholder owns. Your transfer agent can also convert paper shares to a book-entry account.


Author:  JimBoylan [ Tue Dec 03, 2013 10:54 pm ]
Post subject:  Re: Donations of Stock to a Museum

Unfortunately, Branford has an electronic stock broker, meaning it only deals in electronic stocks, like book entry and street name. I wondered how other railway and trolley museums got around that problem. As for the local Red Cross chapter, that's why they have members of the community on their Board, as their friends in the business.
wesp wrote:
We received a very generous donation of stock at NCTM in 2003 after the fire. A friend who was a broker handled the transfer arrangements for us. It was very easy to do.
I own the paper certificates (Pioneer Railroad, PRRR) in my name, and bought them from the Initial Public Offering long ago, not through a broker. They have appreciated more than 19 times that long ago price.

Author:  Dennis Storzek [ Tue Dec 03, 2013 11:31 pm ]
Post subject:  Re: Donations of Stock to a Museum

I dealt with some shares owned by my Grandfather, after his passing, maybe twenty years ago. Grandpa always wanted to hold his certificates. In my case it was done through my broker, who was happy to take the shares onto his books.

I assume Jim holds certificates, but has no brokerage account. I'm certainly no expert, but I would contact the Transfer Agent for the issuing company, and explain what you want to do. They should be able to redeem the shares, then transfer them to the new owner electronically (AKA "street name"). This is, after all, what transfer agents do. I would also suggest you contact a tax accountant to be sure that redeeming the shares does not become a "taxable event", where you are liable for the Capital Gains Tax before the donation actually takes place.

Sorry I can't be more specific.

Author:  David Johnston [ Tue Dec 03, 2013 11:41 pm ]
Post subject:  Re: Donations of Stock to a Museum

Dennis has got it. The Transfer Agent will be able to take the certificates and convert them to book entry shares. They will also provide you with the forms needed to transfer the shares to a brokerage account. The transfer agent just manages the shares for the corporation. They do not need to know why you are doing this.

Author:  robertmacdowell [ Wed Dec 04, 2013 6:27 pm ]
Post subject:  Re: Donations of Stock to a Museum

Edit again, I'm even more convinced the DAF route is the easiest and cheapest way to go. Yes, I am VERY fee-conscious.

The #1 hurdle you've got is moving the paper stocks to modern electronic form. That needs attention ASAP if you want to hit this tax year. For more on moving paper stocks to a brokerage, see this.

Give the stock to charity, don't sell the stock, for this reason.

Here are several ways to donate stock to a charity.

Method 1. Donor Advised Fund. Done by the donor.
1. Find a Donor Advised Fund which corresponds to a discount broker, e.g. Vanguard, Price, Fidelity or Schwab. Open a brokerage account and a DAF there.
2. Transfer your stocks into that brokerage account. (this takes as long as it takes).
3. Transfer the stocks into the DAF. (this takes about 10 seconds).
For tax purposes, you are done. You take the tax deduction in the tax year #3 happens.

4. At your leisure, transfer money from the DAF to the charities you support.

If you immediately give it all to the charity, that's fine. Apparently a lot of people do that.

Or you can leave it in the DAF indefinitely, and it grows, and you can grant it to the charity when the charity needs it. Even if you're broke at the time :) I love it. I do all my giving through my DAF now. One check in December then an easy web interface lets me shoot out a grant in about 1 minute :)

Here are the fees.
Brokerage: typically $10 per trade order. No account fees. Transfers to DAF are free.
DAF: Account fee of typically 0.6% ($60 on $10,000) per year ramping down with larger funds. $100 minimum that will not overdraw the account (if it goes to zero, it stays at zero). This means that if you just pass the money through, your fee will be a few pennies. Yes, really. Details: Vanguard Fidelity Price Schwab
DAF investments: Holding money in the account is free. The smarter thing is to invest in any of the dozen or so investment options they offer. Each of those has its own expense ratio, which is the overhead cost of the fund. They're not ripoffs. They're very well priced, least, the individual funds (which Price does not offer). Details: Vanguard Fidelity Price Schwab

Method 2. Get the charity to take the stock. I don't advise this since the charity is likely to flub it up in some way if they're not practiced at it. There are potholes which can affect them as well as you.

Fees: most likely the charity will spend some money with their tax lawyer or accountant.

Method 3. Work with a community foundation, done by the charity. If your state enables these, then every charity should definitely have a relationship with their community foundation already. They specialize in handling complex giving for their constituent charities.

Fees: The community foundation has overhead and you know it'll come out of your gift.

Method 4. Full service broker. They normally make money by selling you financial products which kickback a high commission. There's no profit in simply transferring stock to a charity directly. If you have a longstanding relationship, they might do it as a favor. Otherwise they may give you bad advice like "sell the stock" simply to give them something to make money on. Be careful.

Fees: Lookout.

Author:  JimBoylan [ Sun Dec 29, 2013 8:04 pm ]
Post subject:  Re: Donations of Stock to a Museum

Here's my experience, and I'm not recommending any particular firm.

The result was that the Museum had an account with E-Trade electronic brokerage, which wold only touch electronic stock certificates, no paper shares allowed. They found that Scottrade in New Haven, Conn. would accept the transfer of paper certificates, but wanted or required that the donor and the Museum both have accounts with them. I found that Scottrade also had offices near me near Philadelphia, Pa. They did want me to open a personal account with them, and wanted assurance that the stock was trading for more than $1 per share. (While the corporate Web site warned that there were extra fees for trading securities valued in pennies instead of dollars, the local office refused to touch them.) Meantime, the price of the stock is going up, up, up!
I did open an account on line, but the computer told me that I had to go to an office to finish the project. At their office, I was told that my application had been rejected as "incomplete" because I hadn't filled in the blanks for employer's name and address, even though I had checked the box for "Retired". The office wasn't that strict and gave me an account number after I signed a printed copy of the "incomplete" application! Meantime, the Museum was being asked for more and more signatures from Museum officers before their account could be opened.
Finally, the Museum got their account number, so I went back to the office near me to deposit the paper shares. I turned down their suggestion to let them sell the stock for me and transfer the money. My new broker checked with the head office to find out when the transfer would occur and was told there weren't enough business days left to process the shares into my new account and them transfer them into the Museum's account before the end of the tax year. He was told to use an "Authorization and 3rd Party Release to Deposit Certificates (that are registered to someone other than the Scottrade account holder)". This form required that both parties sign the same single Certificate in ink, no facsimile signatures allowed. I got a blank form, scanned it and sent it electronically to the Museum so they could sign and return it to me. Meantime, they checked with the New Haven office and were told that form wasn't necessary, that 2 accounts and a transfer, especially of money, were the way to go. I leaned this, and called the Museum's New Haven broker with the title of the form and the reasons my local office had been told to use it. They checked with the head office and found that it was a new form that they didn't know about before. The head office will process it if I can find a local office to accept it. However, the Museum's account requires 2 particular signatures, not just the treasurer's, and all 3 (mine included) must be in ink on the same sheet of paper. Back on the phone with the Museum, luckily people were off work for the holidays, so it was possible to get the proper signatures and have the form mailed to me in time to get it to my local Scottrade office to be processed for 2013's tax deduction.
This form didn't require that I have a Scottrade account, but I suspect that they would be wary of accepting the signature or endorsement on the back of the stock certificates from someone without an account.

The Museum told me that they had an even worse time with forms and complications when a dead member willed some actual electronic securities to them. Apparently, the Will didn't tell the estate to sell them and donate the money.

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