WINSTON-SALEM (AP) ó The near-collapse and sale of Wachovia Corp. that cost investors billions of dollars in losses is also hitting North Carolina nonprofits that used to enjoy regular donations of the Charlotte bankís valuable shares.
Wachovia shareholders on Tuesday approved its takeover by San Francisco-based Wells Fargo & Co. for stock valued at $11.8 billion. The deal is expected to close before the end of the year. Since the forced merger was announced in October, Wachoviaís stock has been selling mostly in a range of between $5 and $6, a fall in the past year from about $40.
ěAs an old-line, legacy North Carolina company, itís really difficult to find North Carolina investors who didnít have a significant piece of their wealth in Wachoviaís stock,î UNC Charlotte finance professor Tony Plath said.
Wachoviaís fall has wiped out the retirement savings of many current and former Wachovia employees, Plath said, and harmed the retirement and college-savings plans of a broad reach of North Carolina investors.
The evaporated wealth also means trouble for churches, schools, and nonprofits that depend on donations.
Like many nonprofits and churches, the Winston-Salem Foundation gets a considerable amount of its money each year from people who donate stocks that have gained value over the year. Donors can take a credit against their tax liabilities for the year.
ěWeíve seen 50 fewer individual stock gifts overall from Jan. 1 through the first week of December than we did last year, which is several million dollars in value,î foundation director Scott Wierman said.
Because of the tax benefit, December tends to be when most donations are made, with some churches receiving up to 20 percent of their annual budget during the month. First Baptist Church in Winston-Salem depends on strong December donations to plug any budget holes, pastor David Hughes said.
ěNaturally, some of the year-end giving consists of proceeds resulting from the sale of stock,î he said. ěTo the degree that this year the stock market is down significantly in general, and Wachovia stock is down markedly in particular, we anticipate a decrease in giving that result from stock.î
Salemtowne Continuing Care Retirement Community in Winston-Salem provides about $800,000 a year in financial help to residents who have outlived their financial resources, Salemtowne president Joe Lydon said. With investment income down, the retirement center has limited overtime and a frozen hiring to cut expenses, Lydon said.