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Revised: 4/2011 Reviewed: 4/2011 |
| PURPOSE |
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To address the disposition of securities received as gifts, and designate those responsible for execution of related procedures and documents. |
| DEFINITIONS |
| ASSIGNMENT AND SIGNATURE GUARANTEE: Required when physical securities are registered in any name other than University of Miami. The donor may endorse the security directly or execute a separate power to transfer ownership. Stock and bond powers are attached as Exhibit A, and can be obtained from a brokerage firm, bank, or the University's Development Services. A separate Stock/Bond Power is required for each certificate. The signature or signatures on the certificate or power must correspond exactly with the name or names registered on the security. The above signature(s) of the person(s) executing the Assignment must be guaranteed by a commercial bank, broker or trust company, bearing the "Medallion Guarantee." The Medallion Guarantee is not the same as a notary, which is a guarantee by an individual as opposed to a financial institution. With the Medallion Guarantee, the financial institution is attesting personal knowledge of the individual(s), or that the institution has done its due diligence and fiduciary duty in identifying the person(s), as opposed to merely providing identification to an individual. |
| DEPOSITORY TRUST CORPORATION (DTC) The DTC is the clearing agent for stocks held electronically. Given the proper DTC instructions, stocks can be transferred between brokerage accounts. |
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FAIR MARKET VALUE (FMV) VALUATION OF STOCKS & BONDS Per IRS
Publication 561, "If there is an active market for the
contributed stocks or bonds on a stock exchange, in an
over-the-counter market, or elsewhere, the FMV of each share or
bond is the average price between the highest and lowest quoted
selling prices on the valuation date." "No Sales on valuation date. If there were no sales on the valuation date, but there were sales within a reasonable period before and after the valuation date, you determine FMV by taking the average price between the highest and lowest sales prices on the nearest date before and on the nearest date after the valuation date. Then you weight these averages in inverse order by the respective number of trading days between the selling dates and the valuation date. Example. On the day you gave stock to a qualified organization, there were no sales of the stock. Sales of the stock nearest the valuation date took place two trading days before the valuation date at an average selling price of $10 and three trading days after the valuation date at an average selling price of $15. The FMV on the valuation date was $12, figured as follows: [(3 x $10) + (2 x $15)] / 5=$12" |
| VALUATION OF SEC RESTRICTED STOCK AND CLOSELY-HELD STOCK Pursuant to IRS regulations and IRS Revenue Ruling 77-287, gifts of SEC restricted stock (e.g. Rule 144 stock) and stock in closely-held corporations must be accompanied by a qualified appraisal to determine its value and to meet the substantiation requirements of the IRS. The University will value the gift according to the qualified appraisal. |
| DONOR-RESTRICTED STOCK Pursuant to IRS regulations, gifts of stock that have restrictions placed by the donor, but are otherwise unrestricted and are marketable are not deemed gifts until the donor-placed restrictions are lifted. Accordingly, the date of the gift will be the date the restrictions are lifted and the University has control over the stocks. |
GIFT DATE: Per IRS Publication 526, the date of the gift is the
date the donor relinquishes total control of the asset and the
security is in our name. The following gift date scenarios apply
for various deliveries:
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| NEGOTIABLE SECURITIES: Fixed income, equities, and funds that can be liquidated directly with the obligor or through the financial markets. |
| PHYSICAL CERTIFICATE: Securities can either be held as a physical certificate or registered electronically. While most securities today are held electronically, older securities may be in physical form and will require assignment to the University, unless the donor had the securities re-issued in our name. Re-issuance of securities is not preferred as it can take substantial time and delays the gift date. Since University policy is to sell gifted securities immediately upon receipt, re-issuance is a unnecessary step. |
| RESTRICTED STOCK: Rule 144 of the Securities and Exchange Commission (SEC) prohibits principals of publicly traded companies from buying or selling their company's securities within certain time frames. Restricted securities will always be physical, and will bear a legend stating that the security is restricted under Rule 144 of the SEC. |
| POLICY |
| It is the policy of the University of Miami to dispose of gifts of securities as soon as possible after receipt from the donor. |
| PROCEDURE |
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General: All gifts of securities are processed and sold through
University Advancement, Department of Development Services. The
Director of Cash Operations negotiates commission discounts and
selects brokers whose expertise best serves the University in
various types of securities transactions. All securities will be
sold through the University's discount broker unless the donor
specifically requests another institution be used. Large blocks
of securities may be offered to the University's equity managers
to reduce transaction costs.
Gifts that cannot be sold until some future date, i.e. restricted stock, are booked at one dollar until the sale can be consummated. The Director of Development Services will proceed to get Rule 144 clearance as soon as possible for such stock. Donors of non-publicly traded stocks valued at $10,000 or more must provide an independent appraisal. Acceptance of these gifts is subject to approval by the University's Gift Review Committee. (Refer to Advancement Policies and Procedures for further details.) Once the securities have been received and under University control, a sale is executed by Development Services as soon as possible. Development Services then generates a Gift of Stock Checklist which details the relevant information of the gift, along with the status of the sale. Development Services forwards all correspondence to the Treasurer's office. When the Treasurer's Office receives the proceeds of the sale, a journal entry is made from the internal deposit ticket to record the gift in the appropriate account. A gain or loss is recorded reflecting the difference from actual proceeds received from the sale, and the donor's FMV. The gain/loss is an internal number and does not affect the donor's gift for tax purposes. A copy of the check, deposit ticket, cash receipt, and finalized Sale of Stock Checklist is sent to University Advancement, Department of Development Services Files containing documentation of securities transactions are maintained in the Treasurer's Office, as well as imaged by University Advancement PHYSICAL SECURITIES: Physical securities accepted as gifts by the University must be in the name of the University of Miami or assigned to the University (see Assignment and Signature Guarantee). Gifts from corporations, foundations and other organizations with governing boards, must additionally be accompanied by a fully executed resolution authorizing the signatories empowered to conduct the transactions. Securities are delivered to the Director of Development Services, Gables One Tower,1320 South Dixie Highway, Suite 350, Coral Gables, Florida, 33146 on the day received, along with the following information: Name of donor, date of gift, purpose of gift, account to be credited (if available) and any correspondence relating to the gift. ELECTRONIC SECURITIES: When a donor wishes to gift stock that is held electronically, the broker must receive DTC instructions (Exhibit B) to transfer the securities into our discount brokerage account. Instructions can also be obtained from Development Services. In addition to the DTC instructions, the donor needs to give direction to the broker regarding what securities are authorized to be transferred. The Director of Development Services should be notified of the name of donor, tentative date of the transfer, purpose of gift, account to be credited (if available), brokerage firm and broker's name, and phone number if available. |
| EXHIBIT A |
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ASSIGNMENT SEPARATE FROM SECURITY For Value Received, the undersigned does (do) hereby sell, assign, and transfer to the University of Miami. IF STOCK, COMPLETE THIS: ** ** shares of the __________stock of ______________ represented by Certificate No. ____________undersigned on the PORTION on the books of said Company. IF BOND, COMPLETE THIS PORTION: one bond of the _____________________________________ in the principal amount of $_____________, No_________standing in the name of the undersigned on the books of said Company. The undersigned does (do) hereby irrevocably constitute and appoint Dain Rauscher Incorporated, attorney to transfer the said stock or bond, as the case may be, on the books of said Company, with full power of substitution in the premises. Signed_____________________________________ (The above signature required a Medallion Guarantee) Dated___________________ |
| EXHIBIT B |
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GIFTS OF STOCK OR BONDS TO THE UNIVERSITY OF MIAMI VIA DTC Listed below are the wiring instructions to the University of Miami's discount broker Young, Stovall & Company. Please notify Mary Prats, Director of Development Services, at 305-284-5576 of the details on the expected gift. If you have any questions or problems with this transfer, please advise Mary Prats or Patricia McGraw at 305-284-4444: WIRING INSTRUCTIONS TO YOUNG, STOVALL & COMPANY FOR THE UNIVERSITY OF MIAMI BOOK ENTRY FOR ELIGIBLE STOCKS & BONDS Depository Trust Company # 235 Crediting: University of Miami Gift Clearing Account # 78503174 ATTN: Maria Flynn - Young, Stovall & Company, Miami, FL. (305) 666-2511, ext. # 310 |
