Posts tagged ‘appreciated stocks’

November 15, 2019

Fundraising Reality Check: 5 Things You Need to Know

A number of myths continue to persist in the fundraising world. While I can’t debunk all of them here, I can deliver a reality check for five important items that I’ve encountered recently when talking with fellow fundraising professionals:

Myth 1: Most People Do Not Own Stocks

Reality Check: The fact is that a majority of Americans own stocks in one form or another. Gallup found that 55 percent of Americans have stock market investments. The greater one’s income, the more likely they are to own stock.

While the stock markets remain volatile, they continue to set new records. In other words, many charity donors own appreciated securities. Under the current federal tax code, anyone can benefit by contributing appreciated stock to a nonprofit organization. That’s because donors of appreciated stocks can avoid paying capital gains tax even if they are non-itemizers who take the standard deduction.

If you’re not asking your prospects and donors to donate appreciated securities, you’re not serving them well and you’re missing out on donations that could be quite significant. So, be sure to let people know that your organization accepts stock gifts, what the benefit is to donors of contributing stocks, and how they can gift stocks.

Myth 2: Giving Tuesday Will Help You Raise Tons of Money

Reality Check: I’m not opposed to #GivingTuesday. My problem with it is that many charities invest an amount of staff and budget resources that will never be justified by the return. In 2018, US charities raised $380 million, reports the Nonprofit Source. For perspective, that’s just 0.089 percent of overall philanthropy for the year. Furthermore, while 63 percent of Giving Tuesday donors give only on Giving Tuesday, we really don’t know if that’s a correlation or a causality; many of those donors might have given anyway on another day.

If you’re going to implement a Giving Tuesday appeal, do it the right way:

  • Have realistic expectations and invest resources accordingly.
  • Remember that a date on the calendar is not a case for support. Don’t ask people to give to your organization just because it’s Giving Tuesday. Let them know what problem their gift will address.
  • Have a thank-you and stewardship plan in place if you want to retain and eventually upgrade Giving Tuesday donors.

Myth 3: Charities Can Ignore Donor-Advised Funds

Reality Check: Okay, charities can ignore Donor-Advised Funds. However, they should not. DAFs accounted for 12.7 percent of overall philanthropy in 2018 compared with just 4.4 percent in 2010, according to The National Philanthropic Trust’s The 2019 DAF Report. In other words, DAF grant payouts totaled $23.42 billion. Total DAF charitable assets were $121.42 billion and climbing. The number of DAF accounts in 2018 was 728.563, a 55.2 percent increase over 2017.

The simple fact is that DAFs continue to grow in significance year after year. More and more donors are creating DAFs. You need to make it easy for people to recommend grants to your charity. You need to properly steward DAF donors and those who recommend DAF grants. You need to keep track of which of your supporters has established a DAF. You need to remind people that, if they have a DAF, they can recommend your charity for a grant.

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January 27, 2017

Your #Charity is Losing Big Money If It Ignores This Giving Option

If you’re like most fundraising professionals, you’re ignoring one high-potential giving option. Sadly, it could be costing your nonprofit organization a fortune.

I’m talking about gifts of appreciated securities (e.g., stocks).

The Wall Street Bull.

The Wall Street Bull.

Just days ago, the Dow broke through the 20,000 level to set a new record close. The NASDAQ and the S&P 500 are also in record territory. As stock values have continued their post-election rally, many more Americans now hold appreciated stocks.

In 2016, 52 percent of Americans said they owned stocks in some form, according to Gallup. While that’s down from the 65 percent who owned stocks prior to the Great Recession, a majority of Americans still hold stock, directly, in mutual funds, and in retirement accounts.

Given that most Americans own stock and many of those stocks have appreciated in value, the nonprofit sector has a tremendous opportunity.

Contributing appreciated stocks provides donors with some important benefits:

  • It gives donors access to a pool of money with which to donate that would not otherwise be available to them for other purposes without negative tax consequences.
  • Contributors who donate appreciated stocks may be able to avoid paying the capital gains tax on those securities.
  • Donors may also be able to take a charitable-gift tax deduction based on the value of the stock donated.

Given the benefits for the donor and the nonprofit organization, I’m puzzled about why more charities aren’t stepping up to promote gifts of appreciated securities.

I know. I know. You’re organization’s website probably mentions this giving option in passing. For example, my alma mater Temple University promotes gifts of appreciated stock and mutual funds on its website. Unfortunately, it takes three clicks from the Home Page to find the 82-word statement buried on the vaguely named page “More Ways to Give.” I suppose that’s a bit better than the charities that don’t mention this giving option at all.

On the other hand, the American Civil Liberties Union does a better job of promoting stock gifts on its website. Furthermore, unlike Temple University, the ACLU site provides all of the information and instructions a donor will need in order to make a gift of stock.

To help donors understand the value of donating stock, The National Philanthropic Trust, which manages Donor Advised Funds, includes a hypothetical case study on its website to illustrate the value of donating appreciated stock.

Savvy donors, perhaps more donors than in recent years, are already benefitting by donating appreciated stocks.

For example, NPT saw an increase of stock gifts last year. Eileen Heisman, NPT’s President and CEO, reports:

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