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March 29, 2023 | Categories Featured, Fundraising Strategies, Nonprofit Technology
Why Nonprofits Should Embrace Stock Gifting
Written for DonorPerfect by Steve Latham, co-founder and CEO of DonateStock
The mixed outlook for fundraisers means nonprofits will need to work smarter to meet their budget goals in 2023. This challenging setup presents a wake-up call for the nonprofit industry. Organizations of all sizes must reassess how they fundraise. They must work smarter, not just harder, and recognize there is increasing competition for fewer dollars.
While the 2022 Giving USA report is not due until June, a recent study found 65% of fundraisers reported last year’s results fell short of those from 2021. Unfortunately, the outlook for 2023 is also grim. Inflation, volatility, and recession fears will undoubtedly impact charitable giving this year.
The good news is that there are billions in untapped funding just waiting to be harvested. More than 60 million households own $30 trillion in stock – more than 8x the amount of cash in the average 45+ household checking account. Appreciated stock also presents the most tax-advantaged way to support nonprofits: donors not only avoid the capital gains tax on the gifted stock, but they can also itemize the fair market value of the stock held more than 12 months.
Stock is a massive untapped source of funding. If the top 50% of investors donated $2,500 in stock to nonprofits, more than $50 billion would flow to nonprofits every year.
Unfortunately, stock gifting has been a 1% solution to date. Despite the overwhelming benefits to donors and nonprofits, stock gifts have been utilized by the wealthiest donors and the largest nonprofits for many reasons. Because of the time and cost associated with stock gift processing, and the inability to properly thank and steward donors who give stock, few nonprofits promote this way of giving.
DonateStock was founded to solve these problems. We make stock gifting easy and accessible for all donors and nonprofits. By using software to automate manual processes, provide transparency of information, and process stock gifts quickly and efficiently, nonprofits can finally tap into this vast source of funding.
The top 3 benefits of a stock gifting solution
When a designated stock gifting solution is not available at the donor’s preferred nonprofit, they usually have to research the process, contact the nonprofit, download forms, gather information, and manually complete and submit paperwork to their brokerage. It often takes days to complete the process. The friction is a major deterrent for donors.
When nonprofits employ a solution like DonateStock, the stock gifting process becomes much more advantageous for both the donor and the nonprofit team.
1. Better donor experience
Without using a solution like DonateStock, the donor’s information is not provided to the nonprofit. Unless the donor informs the nonprofit of the details of their gift, the nonprofit will not know who made the stock gift. The inability to reconcile or acknowledge gifts creates problems for the operations, accounting, finance, and donor relations teams.
What used to take hours can now be done in minutes at no cost to the donor. They now have transparency and comfort in knowing the status and details of each stock gift. Happy donors make bigger gifts.
2. Nonprofit ease and efficiency
Processing stock gifts is a painstaking manual process. Facilitating requests for information, selling gifted stock, and reconciling and acknowledging stock gifts is a costly, manual process. DonateStock experts have determined each stock gift can take 3+ hours and cost $200 – $400 to process (not including brokerage fees).
No longer must you explain the convoluted stock gifting process to each donor and team member or scramble to manually process gifts. Nor must you wonder who donated the mystery stock gift (and who is waiting for a thank you note). Solutions like DonateStock can reconcile the gift, send you the cash, and acknowledge the donor for you.
3. No brokerage required
Most nonprofits (99%) cannot open a brokerage account due to broker compliance costs and policies. As retail brokerages are not able to serve small nonprofits, they have been excluded from stock-gifting altogether.
By electing to have a charitable foundation process your stock gifts, you can avoid the busy work and simply receive the cash proceeds in days.
Your 10-step roadmap for stock gifting success
- Get informed: We’ve condensed almost everything you need to know in the Ultimate Guide to Stock Gifting.
- Educate your board and your team on the need to make stock gifting a key part of your fundraising program.
- Optimize your website – namely your “Donate Now” and “Ways to Give” pages – to make stock gifting a prominent option for donors.
- Leverage research (like the figures provided above) to educate website visitors on the benefits of stock gifting.
- Make it newsworthy: Issue a press release to let donors know that you can now receive tax-advantaged stock gifts.
- Ask for stock gifts from your board or major donors in your network.
- Inform your donors: send an email on the benefits and ease of donating stock, and how they can have a greater impact by making a pre-tax gift. Changing behavior takes time – start now and remind them throughout the year.
- Make it social: Include stock gifting in your social media posts, newsletters, and web communications.
- Integrate stock gifting language in all communications: newsletters, brochures, emails, donation requests, pledge fulfillments, etc.
- Communicate your successes! Nothing drives stock gifts like prior stock gifts. Share your wins with your supporters and create a virtuous cycle of support.
The timing for “stock gifting made easy” could not be better. While donors may be concerned about cash, most own appreciated stock that is even more tax-friendly. Take time now to incorporate stock gifting into your development program – it’s a small investment of time that will pay massive dividends for years to come.
About DonateStock: At the intersection of Fintech and philanthropy, DonateStock is transforming charitable giving by making stock gifting easy and accessible to millions of nonprofits and donors. DonateStock streamlines the stock gifting process to help donors make tax-advantaged stock gifts with ease in minutes while organizations benefit from larger pre-tax gifts along with the tools, automation, and support to launch and grow their stock gifting programs. Visit Donatestock.com to learn more.
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