Why Would Someone Donate Stock to ELi?

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Dylan Lees for ELi

Executive Director Alice Dreger reveals a new way to donate to ELi

When an ELi reader wrote in to ask if he could donate shares of a publicly traded corporation to ELi, I was not sure of the answer. No one had asked me that before!

But since that inquiry from a few weeks ago, I’ve learned a lot about why nonprofit news organizations like us do accept stock donations, what they do with stock donations, and why a donor would opt to make this kind of donation instead of donating cash to ELi.

Today, I’m sharing all that with you.

First, a reminder about our legal status:

ELi is a 501(c)(3) nonprofit corporation, which means the IRS recognizes us as a public charity. That means that donations to ELi are tax deductible to the fullest extent allowed by law.

We take donations from readers and turn that support into meaningful local news for this community. We operate almost entirely on funds donated locally, and we are currently running our 2022 Sustainability Campaign, which seeks to raise $200,000 in donations and monthly commitments for 2022.

If we raise that amount, we will have enough funds secured to get through the entire next year without having to stop to do more fundraising. That’s because we run this entire operation on only about $200,000 per year.

So, why would a person donate stock instead of selling the stock and writing us a check?

Basically, if a person sells stocks and makes a profit on that sale, they will owe capital gains taxes. That capital gains tax reduces how much money they would then have to donate to us. But if they donate the stock, they may be able to deduct the entire worth of the stock.

The donor who is giving stock to ELi explained it this way, when I asked him to do so: “As far as why, donating stock increases the impact for receiving organizations since they receive the gains of the stock tax-free. If one were to donate 10 shares, ELi would receive the full value, but selling those same shares and donating the proceeds would mean the gains on the shares will be taxed, leaving less for ELi.”

What do we do with the stock?

When this donor made the offer, I immediately checked in with our sister organizations at the Institute for Nonprofit News (INN) to ask their advice about handling this.

To a one, they recommended having a Board of Directors-approved policy that allows for accepting the stock but directs a broker to immediately sell the stock and give the funds to ELi. In other words, we should have a policy that prohibits us from remaining as investors, because the donors’ intent is to give us funding, not to have us act as investors.

Consequently, I asked around among ELi’s trusted advisors about what local brokerage firm might help us out with services. I interviewed the contacts I was given, and then I recommended to the Board that we hire Upstream Investment Partners, LLC, a firm located on Lake Lansing Road. Steve Belloli, Founding Partner of Upstream, offered us a great deal and a lot of enthusiastic support.

I convened a short meeting with our Board of Directors, and they unanimously voted through a policy to accept stock donations and order the immediate sale. They also unanimously voted to engage Upstream.

When I asked him for a comment about why he would work with us on this, Steve Belloli told me, “Upstream Investment Partners, through our Broker/Dealer Sigma Financial Corp, is happy and excited to work with non-profits, such as ELi, with any stock donations they receive. We believe such an event can be a win/win for both the donor and the non-profit.”

A key service that Upstream offers us is providing our donor a valuation of the donated stock. That is achieved by using an industry standard of taking the average value of the stock on the day it was donated.

How are we doing on the 2022 Sustainability Campaign?

The stock we are about to receive is worth about $4,000! We are so very grateful for this, of course!

Right now – not yet having completed that transaction – we have raised a total of $39,000 in donations and commitments in our 2022 Sustainability Campaign. (Monthly commitments are counted at the annual total, so a $25 month commitment is counted by us as putting us $300 closer to our goal.)

Excitingly, we have about $46,000 remaining in committed matching funds, which means that if we get enough donations to meet all of that match, we will reach at least $132,000 in this campaign. But our ultimate goal is to raise $200,000 by Dec. 31.

We can leapfrog ahead with monthly commitments, thanks to the matches. If you commit, say, $20 a month, with the match, that gets us $480 closer to our goal – nearly $500 for us!

But to get to our goal, we do need the help of people who have not yet donated or those who want to donate more.

So, if you’d like to help, write to us at fundraise@eastlansinginfo.news, or just hop on to our donation page and give right now! Thank you so much to everyone who has been so generous!

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