can nonprofits sell stock? Practical guide for charities

Can nonprofits sell stock?

Can nonprofits sell stock is a common and practical question for charities, donor advisors, and nonprofit boards. This article answers both senses of that question: (1) whether a nonprofit organization can sell (liquidate) stock or other securities that it owns (for example, donated shares), and (2) whether a nonprofit can issue or “sell” equity/share ownership like a for‑profit corporation. Readers will learn the legal, accounting, tax, and operational implications and get a checklist and recommended policies to handle stock gifts safely and effectively.

As of 2026-01-21, according to guidance from the IRS and leading nonprofit donor-advice organizations, selling donated publicly traded securities remains a routine and tax-favored practice for public charities. These resources stress proper valuation, timely acknowledgment, and written gift-acceptance procedures.

Note: the repeated keyword appears in this guide because many readers search “can nonprofits sell stock” when they need practical steps and compliance guidance. This article uses that phrase repeatedly to make the answers easy to find.

Two distinct meanings of the question

When people ask “can nonprofits sell stock,” they typically mean one of two distinct things. The answers differ depending on which meaning is intended:

• Selling securities a nonprofit owns (liquidation of donated or invested shares): Yes, generally nonprofits can sell stock they own, subject to investment policies, donor restrictions, and applicable law. Organizations routinely convert securities to cash to fund operations or reinvest assets.

• Issuing stock or equity interests to investors (selling ownership): No, not in the way for-profit corporations sell shares. Most nonprofit corporations—especially 501(c)(3) public charities—are non‑stock entities and may not issue equity or distribute profits to private owners. Ownership of a nonprofit does not transfer via a stock sale.

This guide focuses mainly on the routine practice of accepting and selling securities the nonprofit owns, while also explaining why nonprofits do not (and generally cannot) issue stock or equity.

Can a nonprofit own stock?

Yes. A nonprofit (including most 501(c)(3) public charities and many other nonprofit types) may hold publicly traded and privately held securities as part of its assets. Common reasons a nonprofit will own stock include:

• Receiving donated publicly traded shares from individual or corporate donors;
• Holding privately donated interests (private company stock or restricted shares) as legacy gifts;
• Investing endowments, reserves, or operating cash in diversified portfolios that include equities;
• Maintaining program-related investments that may take equity form.

Holding securities is a normal component of nonprofit asset management. However, nonprofits must manage these holdings under their investment and gift-acceptance policies and in compliance with donor restrictions and tax rules.

Can a nonprofit sell stock it owns?

Short answer: yes, a nonprofit can sell stock it owns in most cases. Selling donated or held securities is a common and accepted way to convert noncash gifts into cash for programs, operations, or reinvestment.

Key practical and legal points:

• Donated publicly traded securities are often sold promptly to realize cash for use unless donor restrictions require holding them.
• If a donor places a restriction (for example, the gift is for a specific program or must be held as an endowment), the nonprofit must follow that restriction.
• Nonprofits should follow written policies that address timing of sales, approval thresholds for large or illiquid gifts, and conflict-of-interest considerations.

The rest of this section explains operational steps, recordkeeping, and accounting treatment when a nonprofit receives and sells securities.

Practical process for receiving and selling donated stock

Operationally, the flow for a donated stock gift typically looks like this:

1. Gift acceptance setup:

   • The nonprofit establishes a brokerage (transfer/clearing) account in the organization’s name to receive securities.
   • The organization publishes transfer instructions for donors (broker name, DTC or transfer agent details, account number, and the nonprofit’s tax identification information).

2. Donor transfer:

   • The donor initiates an electronic transfer from their account (or delivers physical certificates where permitted) to the nonprofit’s brokerage account.
   • Some donors use donor-advice services or intermediate platforms that simplify transfers; examples in the donor-services space include services specifically designed to transfer securities to charities.

3. Receipt and acknowledgment:

   • On receipt, the nonprofit records the gift, notes the date and number of shares, obtains the fair market value at the date of transfer, and sends an acknowledgment letter to the donor.

4. Decision to sell or hold:

   • The nonprofit follows its gift acceptance policy. Many organizations have a default rule to liquidate publicly traded securities promptly to minimize market risk and simplify stewardship, while private or restricted gifts may require board approval.

5. Sale and settlement:

   • The nonprofit instructs its broker to sell the shares. The brokerage handles trade execution, settlement, and remittance of proceeds, net of fees.

6. Recordkeeping and reporting:

   • The organization records realized gains or losses, broker fees, and the use of proceeds. If the gift was restricted, the nonprofit ensures proceeds are used consistent with the restriction.

Many modern donor tools and services streamline this process by providing electronic transfer instructions and automated acknowledgements; nonprofits should evaluate these providers for cost, security, and ease of integration with existing accounting and donor-management systems. When web3 wallets or crypto-style custody are part of a charitable program, nonprofits should favor reputable custodial wallets; when mentioning wallets, consider Bitget Wallet for compatible asset management needs in digital-asset contexts.

Accounting treatment

Under generally accepted accounting principles (GAAP) in the United States, donated securities are recorded as contributions at their fair market value on the date the nonprofit obtains control over the gift (generally the date of transfer). Practical steps:

• Publicly traded securities: Use the closing market price on the date of receipt to determine fair value.
• Non‑publicly traded securities: Obtain an independent qualified appraisal or follow valuation rules and Form 8283 reporting thresholds where applicable.

If the nonprofit sells the donated securities immediately, the contribution revenue equals the recorded fair market value, and any difference between the sale proceeds and the recorded value is recognized as a realized gain or loss in the investment results. Transaction fees and brokerage commissions are recorded as investment expenses or transaction costs.

Accurate documentation is critical: donation records should show donor information, the securities transferred, the date and time of transfer, the fair market value determination, and the date and proceeds of any sale.

Tax and regulatory implications

When answering “can nonprofits sell stock,” it is essential to cover tax treatment for both donors and nonprofits and to explain regulatory differences that may affect whether and how a sale is taxed.

• Donor tax benefits: Donors who contribute appreciated publicly traded securities typically avoid paying capital gains tax on the appreciated portion and may claim an income tax charitable deduction for the fair market value of the securities, subject to IRS rules on holding periods and income limits.
• Charity tax treatment: Most public charities are tax-exempt and do not pay federal income tax on the sale of donated securities. That means a public charity that sells appreciated stock generally receives the full fair market value of the gift for use in its programs, without an intervening capital gains tax bill.

Important exceptions and caveats include:

• Private foundations: Private foundations face special rules and excise taxes on net investment income; certain transactions may have different reporting and tax consequences.
• Unrelated Business Taxable Income (UBTI): Routine passive investment income (dividends, interest, and capital gains from sales of securities) generally is not UBTI. However, if a charity engages in an active trade or business, or has debt-financed investments, some income may be taxable. Certain types of activities may generate UBTI; consult tax counsel for complex situations.

Differences: public charities vs. private foundations

Public charities and private foundations are both nonprofit organizations, but tax rules diverge in important ways:

• Public charities (typical 501(c)(3) operating charities and public‑supported organizations) are generally exempt from federal income tax on sales of donated securities. Donors to public charities generally receive more favorable deduction treatment when donating appreciated securities.
• Private foundations are subject to an excise tax on net investment income (a small percentage), and donors to private foundations face different deduction limits. Private foundations may also be subject to additional self-dealing and excess business holdings rules when they accept or sell certain types of investments.

Nonprofits should know which category they fall in and consult tax counsel and their CPA for transactions involving significant amounts or unusual assets.

Unrelated Business Taxable Income (UBTI) and other exceptions

Most passive investment gains from buying and selling securities are excluded from UBTI. But taxable exceptions include situations such as:

• Income generated by an active business activity unrelated to the nonprofit’s exempt purpose.
• Debt-financed income—if the nonprofit acquires property with borrowed funds and the income on that investment is debt-financed, it may generate UBTI.
• Certain partnership or LLC interests that cause the nonprofit to be engaged in a business for tax purposes.

Nonprofits considering investments that might produce UBTI should review the IRS rules carefully and consult tax counsel to avoid surprise taxable income and filing obligations.

Donor tax benefits and implications

Donors often choose to give appreciated securities rather than cash because of potential tax advantages. High-level points for donors:

• Capital gains avoidance: When a donor transfers appreciated publicly traded stock held long-term to a public charity, the donor generally avoids capital gains tax on the appreciation.
• Deduction for fair market value: Provided the donor itemizes and meets IRS rules (holding period, donation to a qualifying public charity, and applicable deduction limits), the donor may deduct the fair market value of the stock on the date of gift.
• Limits and substantiation: There are deduction limits based on adjusted gross income (AGI) and special documentation rules for noncash gifts. For gifts above certain thresholds, donors must complete Form 8283 and may need a qualified appraisal for non‑publicly traded assets.

Donor-advised funds (DAFs) are an alternative: donors may contribute appreciated securities to a DAF, receive an immediate tax deduction, and recommend grants to operating charities over time. DAFs often streamline transfers and provide centralized management for donated securities.

Can a nonprofit issue or sell stock (equity)?

Directly answering the other meaning of the question: can nonprofits sell stock in the sense of issuing equity to buyers—no, generally they cannot. Typical nonprofit corporations are structured as non‑stock entities and do not issue shares of stock that confer ownership or the right to profit distributions.

Key points:

• No private ownership: Nonprofits do not have private owners or shareholders who can claim profits. Instead, they have members or a board of directors that govern the organization in furtherance of its mission.
• No distribution of profits: Nonprofits must reinvest surplus revenue in their exempt purpose. Distributing profits to insiders or members is legally prohibited and may trigger penalties for private inurement or private benefit.
• Dissolution rules: On dissolution, nonprofit assets must be distributed to other tax‑exempt organizations or for public purposes, not sold to private owners for their private benefit.

Because nonprofits cannot issue stock as a means of raising equity capital, fundraising occurs through donations, grants, program revenue, loans, or other financing methods appropriate for nonprofit entities.

Governance and private inurement rules

Legal constraints around private inurement and private benefit reinforce why nonprofits cannot issue traditional stock:

• Private inurement: Tax-exempt law prohibits insiders (officers, directors, or key employees) from receiving undue economic benefits from the nonprofit’s assets or transactions. Permissible compensation for services must be reasonable and documented.
• Private benefit: Charitable activities must primarily benefit the public rather than private interests. Transactions that confer substantial private benefit can jeopardize tax-exempt status.

These governance rules are why nonprofits use restricted donations, program service contracts, and other legitimate revenue sources rather than equity sales.

Special cases and complications

Some scenarios complicate the straightforward answers to “can nonprofits sell stock,” especially when gifts are not simple, liquid, or unrestricted.

• Privately held stock or restricted shares: Gifts of private-company stock or restricted securities are often illiquid and may require appraisal. Nonprofits must evaluate the asset for marketability, valuation, and potential conflicts.
• Prearranged sales or quid pro quo arrangements: If a donor and charity prearrange a sale or if the donor retains control over the asset, the gift may fail to qualify for favorable tax treatment. Donors should avoid arrangements that undermine the charitable nature of the gift.
• Transfer limitations: Some transfer agents or companies restrict transfers of certain classes of stock or require company consent before a transfer to a nonprofit.
• Valuation and Form 8283: For gifts of non‑publicly traded securities (or gifts above a certain threshold), donors must file Form 8283 and may need a qualified appraisal. The nonprofit should cooperate with donor documentation but must not inflate valuations.
• Wash-sale considerations for donors: Donors who sell securities and then donate proceeds may face tax consequences. Donors and advisors should consider timing and tax rules when planning gifts.

When a nonprofit contemplates accepting complex securities, it should perform due diligence, seek board approval for nonstandard gifts, and obtain legal and tax counsel as needed.

Recommended nonprofit policies and best practices

To manage gifts of securities safely and consistently, nonprofits should adopt and follow written policies and procedures. Recommended elements include:

• Gift acceptance policy: Define acceptable asset types, approval thresholds for unusual or illiquid gifts, who may approve nonstandard gifts, and what due diligence is required.
• Investment policy: Specify objectives for invested assets, liquidity needs, asset allocation, and who may authorize sales or purchases.
• Transfer instructions and templates: Provide clear written transfer instructions for donors and brokerages, and standardized donor acknowledgement letters for stock gifts.
• Timely acknowledgement and valuation documentation: Promptly acknowledge gifts, record the date of receipt and fair market value, and provide donors with the documentation needed for tax filing.
• Board approval thresholds: Set clear board-level approval requirements for acceptance or retention of significant or restricted securities.
• Broker and custody relationships: Establish relationships with reputable brokerage firms and custodians that can accept charitable transfers and execute sales.
• Conflict-of-interest and gift-review procedures: Implement reviews for gifts from interested parties or that create potential conflicts.
• Training and staff assignments: Train development, finance, and board members on handling noncash gifts and assign clear staff responsibilities.

Following these practices reduces legal and reputational risks and ensures donor confidence.

Risks and considerations for nonprofits

Nonprofits accepting and selling stock should be mindful of these risks:

• Market volatility: Securities can decline rapidly. Decide whether to liquidate quickly or hold based on policy and donor restrictions.
• Liquidity constraints: Private or restricted securities may be difficult to sell in a timely manner.
• Valuation challenges: Nonpublic securities require careful valuation and may trigger appraisal requirements for donors.
• Transfer friction and fees: Brokerage fees, transfer agent requirements, and administrative work can reduce net proceeds.
• Compliance and reporting: Inaccurate documentation can create donor disputes or IRS scrutiny.
• Reputational risks: Accepting gifts from controversial donors or restricted assets may affect public perception.

A practical mitigation strategy is to adopt clear policies, require board sign-off for complex gifts, and consult legal and tax advisors when in doubt.

Practical checklist for nonprofits wanting to accept and sell stock

Use this short checklist when your organization is preparing to accept and sell stock:

• Verify your 501(c)(3) status and public charity classification.
• Open or confirm an organizational brokerage/transfer account that accepts charitable transfers.
• Adopt or update a gift acceptance policy with thresholds for gift types and approval authority.
• Prepare clear transfer instructions and donor acknowledgement templates.
• Work with your CPA or tax counsel to confirm valuation and reporting requirements (Form 8283 where applicable).
• Decide default sell-vs-hold rules and board approval thresholds for nonstandard gifts.
• Train development and finance staff on processes and recordkeeping.
• Maintain relationships with brokers and third-party services that can facilitate transfers and sales.
• Document every gift: donor name, securities transferred, date of transfer, fair market value, sale proceeds, fees, and donor acknowledgement.

Frequently asked questions (FAQ)

Q: Do nonprofits pay capital gains tax when they sell donated stock?

A: Generally, public charities do not pay federal income tax on realized gains from the sale of donated securities. Exceptions and special circumstances may apply (for example, certain private foundation rules, debt-financed income, or unrelated business taxable income). Consult a CPA or tax counsel for your organization’s facts.

Q: Can a donor receive a deduction for giving appreciated stock to a nonprofit?

A: Yes—if the gift is to a qualified public charity and the donor meets IRS rules (holding period, deduction limits). Donors typically avoid capital gains tax on the appreciation and can deduct the fair market value subject to AGI limits. For nonpublicly traded gifts or gifts above certain thresholds, additional documentation or appraisal may be required.

Q: Can a nonprofit be sold to a private buyer?

A: No. Nonprofit organizations do not sell ownership via stock. On dissolution, nonprofit assets must be transferred to other qualified nonprofits or public purposes, not to private individuals for their personal benefit.

Q: What if a donor wants to give private company stock?

A: Accepting private company stock requires careful due diligence—valuation, transferability, liquidity, and potential conflicts. Many nonprofits require board approval and may decline such gifts if they are impractical or risky.

Q: Are there third-party services that help charities accept stock donations?

A: Yes. Several donor services and platforms facilitate transfers of publicly traded securities to charities and streamline donor acknowledgements and receipts. Nonprofits should evaluate these services for cost and security and ensure they integrate with internal controls.

References and further reading

Sources and practical guides referenced in the preparation of this article include guidance and education materials from established donors and nonprofit advisors, accounting firms, and donor services. Notable resources include:

• FreeWill guidance on accepting stock donations and donor instructions.
• Fidelity Charitable educational materials on donating appreciated securities and the tax implications for donors.
• Donor-services platforms that help transfer stock gifts to charities and simplify donor acknowledgements.
• Accounting advisories from nonprofit-focused CPA firms on recording and reporting stock donations.
• DAF and donor-advised fund guidance on transferring securities to DAFs and subsequent grantmaking.
• Foundation Group materials on nonprofit structure and the legal concept of non‑stock corporations.

Organizations considering acceptance of stock donations should consult these materials and their own legal and accounting advisors to match the guidance to their situation.

Appendix: U.S. IRS rules (selected notes)

• Valuation: For publicly traded securities, fair market value is generally the closing price on the date the charity obtains control. For nonpublicly traded gifts or gifts of significant value, donors may need a qualified appraisal and must attach Form 8283 to their tax return.
• Form 8283: Donors must complete Form 8283 for noncash gifts above a statutory threshold; appraisals are required for certain types of property.
• UBTI: Most capital gains from sales of securities are not UBTI, but there are exceptions for debt-financed investments or active business income.

As of 2026-01-21, donors and charities still rely on the IRS rules above; always confirm current thresholds and reporting requirements with the IRS or a tax advisor.

Final notes and next steps

If you asked “can nonprofits sell stock” because your charity is considering accepting securities, start with a written gift acceptance policy and an organizational brokerage account. Document every transfer, coordinate with your CPA for valuation and Form 8283 requirements, and set clear board-level rules for unusual or illiquid gifts.

Want to modernize digital asset handling for charitable programs? Explore Bitget Wallet for secure custody of compatible digital assets, and consider integrating donor-services that streamline securities transfers. For questions about tax treatment or unusual assets, consult a nonprofit CPA or tax counsel.

Further practical assistance is available from nonprofit accounting advisors and donor-services organizations. Establishing clear policies and documented procedures will make accepting and selling stock a reliable and donor-friendly part of your fundraising toolkit.