Cocatalyst Asset Pledges (Beta)
We are pleased to announce Asset Pledge gifts on the Cocatalyst platform in beta. Donors can now transfer ownership of their appreciated stock to Cocatalyst for an immediate tax write off while engaging with their nonprofit to decide when to sell the stock and make the transfer of funds to the organization. The donor earmarks the stock for a specific charity at the time of donation. The deduction for Asset Pledges is the same as donating appreciated stock, which is 37% more tax effective than cash.
Donors have various financial situations. For example, there are long term investors and others that receive employee stock as part of their employment. Each has a different goal for holding and disposing stock. However, the financial services industry has had a one size fits all approach of donating stock. Outside university endowments, charities typically liquidate the stock immediately after receipt with no intention to hold onto it. Also stock brokers can take up to several weeks to complete a stock donation, which can make it hard to predict the stock sale price. Both factors leave money on the table that otherwise could be repurposed for helping society through charities.
With Cocatalyst Asset Pledge, donors and charity have various ways to leverage stock to maximize their giving goals.
For instance, Justin is a regular donor with Worldvision. He’s also a long-term investor. He originally bought Tesla stock on IPO in 2010. After a number of years, he wants to donate a portion for the tax deduction to offset other income. He gave Tesla stock worth about $50,000 on Jan 2, 2018. if the charity held it until today (Dec 8, 2020), rather than selling, that stock would have been worth over $500,000.
In addition to appreciating over the long-term, most stocks are volatile in the short term. Donating a stock on a Monday versus Thursday of an eventful week may change the sale prices of the stock to the charity. It is hard to perfectly time the transfer because the stock donation time can vary from a few days to three weeks.
Finally, when a donor wants the charity to keep the asset, this requires either 1) the lengthy process to modify the charity’s bylaws to hold stock or 2) the donor opens a Donor Advised Fund (DAF), such as Schwab Charitable. However, most DAF have limited investment choices for donors and for charities, and there is always concern the stock sale proceeds in future years will be granted to another charity rather than theirs.
Asset Pledges on Cocatalyst allow donors to commit securities to a specific charity and choose when the stock should be liquidated and cash given. While the charity that receives the stock must be selected at time of donation request, the actual sale date can be up to 3 months after Cocatalyst receives it. The donor will receive the tax-receipt immediately so the deduction can be taken for the tax year of transfer.
Testimonials
“With Cocatalyst Asset Pledges, I can transfer my stock to Cocatalyst and then wait for a day when the price is high to sell for the charity. This could be a few days, few weeks, or even a few months so that even with sudden stock market bumps, I can have more control of my stock donation. Before I preferred to donate stock in multiple batches since I am unsure of the stock price when the charity sells them. Now that the charity and I have that control over the selling day then I can donate one big batch and then choose the day to sell.” says Gordon G, an early employee at a publicly-traded company.
“Up until now, our charity’s policy has been to sell when donations arrive to reduce our administrative headache. However, many of our donors work at innovative Silicon Valley companies. We are interested to take part in their growth in a low-risk manner. Cocatalyst Asset Pledges change the way we think about donations and engagement. Our reserves can grow faster than cash and the donors can be closely involved with the long term finances of our charity. We are excited to be able to sell pledged assets before putting the proceeds into our general operating fund” - Tarik El-Ansary, Finance Pastor at Reality SF.
Getting Started with Asset Pledges
Donors complete the standard appreciated Stock Donation form on Cocatalyst. After signature, the donor should email support@cocatalyst.org with the following template filled out:
Asset Pledge advice Request
Dear Cocatalyst,
I, [name of donor], would like to convert the donation [donation ID number] to a stock pledge. The [charity ] will advise Cocatalyst on when to sell the stock. I acknowledge that liquidation requests are a best effort basis and for the duration of the beta, time limits are 90 days.
Sincerely,
[name of donor]
Asset Pledge Conversion advice Request
Dear Cocatalyst,
I, [name of representative and charity name], would like to convert the close the stock pledge [donation ID number]. I acknowledge that liquidation requests are a best effort basis, but I would appreciate the stock being sold as soon as possible..
Sincerely,
[name]
Liquidation requests are processed on a best effort basis. We aim to sell the stock on the same day or next business day. The normal Cocatalyst fees apply at time of transfer of proceeds to the charity.
Do nonprofits have to sell donated stocks?
Not anymore! Using Cocatalyst Asset Pledges, it’s now extremely easy for donors to work with charities to hold stock for day, months, or even years.