March 25, 2004 - reprint
By DAN HAAR,
Courant Staff Writer
Nonprofits Vie For A Share
Manchester Bank Bringing Donations
stockholders of Savings Bank of Manchester prepare to sell their company
at a huge profit, several charities and non-profits are angling to reap a
piece of the windfall.
It's a rare opportunity for local groups that depend on the kindness of
New Haven Savings Bank is expected to buy the parent of SBM next week,
assuming SBM shareholders approve the $52-a-share deal. Because SBM went
public at $10 a share just four years ago, and because its shares were
offered to depositors, much of the capital gain - about $450 million -
will fall to households in central Connecticut.
Those households are fortunate, but most will owe 20 percent of their
gains to state and federal tax collectors. Enter the nonprofit groups, who
are asking - politely and with subtlety - for some of those shares before
next week's meeting.
It could work in everyone's favor.
The groups would benefit from a tax law that allows shareholders to avoid
capital gains if they donate stock to a non-profit - but only if they make
the gift before the vote on the merger, scheduled for Tuesday.
Donors could still deduct the full $52 a share from their taxable income.
Shareholders who donate after the vote can still take a deduction, of
course, but they'd have to pay the capital gains tax.
And so, spurred by a West Hartford accountant who specializes in
non-profit clients, the groups are urging would-be donors to consider the
But this isn't a hard sell. The groups are targeting people who are likely
to give anyway, and they have mailed notices to their own lists - not to
shareholders of the bank.
The University of Connecticut Foundation, which had never before put out
such a general call during a merger, has so far received three donations
of the bank stock, including one for $25,000, a foundation spokesman said
earlier this week.
Adam Cohen, the accountant who advised some of the groups, said
this type of solicitation is not common for non-profits around the
country, despite a wave of mutual banks and insurance companies converting
to stock ownership.
"What they're trying to do is inform shareholders of the implications and
the opportunity for them to fulfill their charitable intent," said Cohen,
whose fees were not based on how much the clients raised. "The interesting
thing about this is it's really non-coercive."
Cohen said he has heard of a few significant donations so far, and
naturally stockholders may wait until the last minute.
In recent years Cohen has helped clients -and nonprofit groups that are
not clients - tap into donations in the Aetna Inc. sale of its retirement
and international business to ING Group, and the proposed reincorporation
of The Stanley Works. Some Stanley stockholders donated shares in
anticipation of a capital gain, but in the end, the reincorporation did
Go to: http://www.cohen-nfp-cpa.com/