When a donor gives securities to a church, 99.99% of the time the church will want to sell the security to generate cash for the donor’s intended purpose. In order for a church to sell the security, it must have a relationship with a brokerage firm. If the church doesn’t have the right kind of relationship with a brokerage firm, there will be a commission charged by the brokerage to negotiate the gifted security. These commissions are percentage-based, so the commission increases with the size of the gift, leaving less to the church or its intended ministry.

If the church is not familiar with the transaction process, it could take months before all the transactions are completed, especially if the church receives an actual stock certificate that is still in the donor’s name. A transaction time frame of a couple of months is not very convenient for the donor who makes a gift in the second week of December and is expecting to be credited for their gift by year’s end for income tax deduction purposes.

Once the security is turned into cash for the donor’s intended purpose, the church, is responsible for completing: 1) a properly worded “Donation Letter,” if the gift is valued at more than $250, 2) an IRS Form 8282, if the gift is valued at more than $500, and 3) an IRS Form 8283 if the donor intends on claiming the gift as a deduction on an itemized tax return. The Fair Market Value of the gifted security on the date of receipt is required on one form, and the amount received on the date of sale is required on the other form. DSUMF refers to these documents as the “Donor Packet.” Preparation of these three documents by the church is required by the Internal Revenue Code. Therefore preparation of the Donor Packet requires specialized knowledge that most churches do not have readily available.

In addition to preparing and distributing the documentation in a reasonable time, the church is required to produce certain records for permanent files that are required by auditors. If a church is accepting gifted securities and is not producing either the Donor Packet or permanent transaction records, then it runs the risk of “failing” a professional audit.

When churches using our investment service encourage their members to transfer their gifts of securities through the DSUMF, the gifted security comes directly to DSUMF and not to the church. Therefore, DSUMF is the recipient organization that becomes responsible for producing all the proper “paper trails” required. We also maintain permanent records both in “hard copy,” and electronic formats. To affect a gift of securities, an investment service depositor needs to give the transfer instructions to their member/donor and then sit back and wait for a check from DSUMF. We also properly prepare the Donor Packet in a timely fashion.