- Gift Value : Average of the opening and closing stock price on the day the stock is received.
- Always use the Gift Type field to mark the transaction as a Stock Gift for ease of selection in reports.
- Enter the description of stock into the Gift Comment field for including in gift acknowledgments and fund statements.
Dealing with Hold until Sold Issues
Many non-cash Gift issues involve Stock Gifts and the various ways to record the difference between the original Gift amount and the cash amount added to (or subtracted from) the Fund when the stock is sold. This difference is normally recorded as a Realized Gain (or Loss) .
Recording Receipt and Sale of Stock in One Transaction:
If the stock is sold almost immediately upon receipt, distinguish the Gift value from the gain/loss of the sale. If you do not have the Stock Gift Management module, you can accomplish recording this in one gift transaction by doing the following:
- Enter the gift value in the Amount field.
- Enter the gain or loss in the Non-Gift Amt. field. The non-gift amount is the difference between the value and the net proceeds, and will automatically be given a non-gift distribution line.
- Enter the appropriate debit and credit accounts for the gain or loss on the General Ledger tab . The Non-Gift credit account should be Realized Gain/Loss, rather than the Gift revenue. The same account should be used for the debit entry. A loss should be entered as a negative non-gift.
Entries to Realized Gain/Loss are made with the G/L Journal Key GI and can be distinguished from those entered from FACTS ( FA ) for audit purposes.
Example for Entering a Stock Gift and Net Proceeds in One Gift Record:
Scenario - Gift value (average of high and low on day sold) = $10,000
Net check received after sale = $11,000
Fee of $100
Realized Gain of $1100
- Enter the following in the Gift and Non-Gift fields:
- Gift Amount = $10,000
- Non-Gift Amount = $1,000 (difference between the value and net proceeds)
- Go to the Distribution tab and set up 3 lines all to one fund:
- 10,000 Gift
- -100 Non-Gift (for fee) (use the admin fund for the fee if that is your policy)
- 1,100 Non-Gift (for realized gain) (some foundations use admin fund for losses, donor fund for gains)
- Save the Gift.
- Enter the following on the GL tab:
- Gift: Debit asset $10,000 - Credit revenue $10,000
- Fee: Credit asset $100 - Debit expense $100 (put amount in as negative - put asset in debit field and expense in credit field - it will switch signs)
- Realized Gain: Debit asset $1,100 - Credit realized gain $1,100 (if a loss, put in as a negative)
Posting to a Holding Account and Recording Gains/ Losses After Posting
Use this method if you want to post the Gift before the Stock is sold. Before you can use this method, you must create a new asset account (for example, Stock Gift in Transit ).
On the General Ledger tab, substitute the default deposit account with the Stock Gift in Transit account.
When the stock is sold, adjust the gift using the proceeds receipt date as the adjusting and reversing dates. The adjusting gift will follow the same steps as Recording Receipt and Sale of Stock in One Transaction.
Recording Gains/Loses with manual General Ledger journal entries:
Use this method only if you don't mind if the proceeds of the sale are not with the Gift History record.
- Create manual journal entries in GL as follows:
- Debit the cash amount of the sale to the normal investment account for the Fund.
- Credit the full original value of the Gift to the Stock Gift in Transit account (or other original asset account used).
- The difference between the two values is made up with a debit (loss on sale) or a credit (gain on sale) to Realized Gain/Loss.
Note: For a more robust means of managing the Stock Gift process, including the entire process of booking the security, communicating with the broker, and recording the sale, use the FIMS Stock Gift Management module.