Dec 6, 2023
Taking Stock in Nonprofits: The New Imperative for Fundraisers
Fundraisers in 2023 are facing numerous headwinds. The good news is that stock gifting represents billions in untapped support. Nonprofits have the key to unlock a new source of funding – they just need to use it.
Charitable giving reached record levels in 2020 and 2021. Fueled by stimulus spending, a surging stock market and groundswell of generosity, the industry was awash in cash. In 2022, everything changed.
A Perfect Storm
Due to a confluence of events, charitable giving fell 13% (adjusted for inflation) in 2022. Unfortunately, the outlook for 2023 is also cloudy due to several factors:
Fewer donors: Twenty years ago, 65% of US households gave to charities, churches, schools, and foundations. Today that number is less than 50%. As reported earlier by the Fundraising Effectiveness Project, the number of donors decreased almost 20% in the last 10 years.
Record inflation: The cost of living has increased as inflation of 8% put significant pressure on family budgets. With fewer household dollars to spare, there was less to give to charities, schools, and community organizations.
Economic uncertainty: Fears of recession and layoffs left cash-strapped consumers feeling even more reluctant to give.
Record consumer debt: Consumer credit debt just eclipse $1 trillion – an all-time high.
While the cash in our wallets might be dwindling, the assets in our investment accounts remain substantial with half of US households own $30 trillion in securities.
Now more than ever nonprofits, must expand their horizons and lean into new sources of non-cash giving.
Hello Stock Gifting!
The biggest source of non-cash giving is appreciated stock. Today more than 100 million Americans own $30 trillion in investment accounts. Unbeknownst to most is that stock also offers unmatched tax benefits over cash – namely the ability to avoid capital gains tax while deducting the current value of gifted stock held more than 1 year.
As we approach the end of the year, the S&P 500 is near its all-time high, along with the most widely held stocks including Alphabet, Apple, Nvidia, Microsoft, Meta, Amazon, and Tesla. Despite the headwinds mentioned above, investors are doing well, and stock represents $50-$75 billion in untapped funding for nonprofits.
The problem with stock gifting
Historically, stock gifting has been an instrument of the wealthiest 1%. Few investors were aware of the unmatched benefits of stock gifting, and the few who attempted to make a stock gift (me included) found it to be extremely painstaking and time consuming.
Stock gifting also presented formidable challenges for nonprofits. The costly, manual process of facilitating, reconciling, and acknowledging stock gifts makes it impossible to scale. The fact that the donor’s information doesn’t accompany the stock makes it hard to know whose stock is whose. For these reasons stock gifting comprises less than 2% of most fundraising budgets.
Breakthroughs in stock gifting
The good news is that stock gifting is now accessible and easy for all donors and nonprofits. Innovation and automation are removing barriers and friction for all parties. Here is a summary of how we’ve democratized stock gifting:
- Better donor experience: What used to take hours can now be done in minutes through our Easy Button for Stock GiftingTM. Like “PayPal for stock gifting”, donors can initiate stock gifts in minutes with ease. By making stock gifting an enjoyable process, donors are more inclined to make subsequent gifts in the future.
- Access for all: Nonprofits of all sizes can now receive stock gifts – no brokerage required. Through Donatestock Charitable (501c3), stock gifts can be reconciled, acknowledged, and converted to cash for nonprofits who do not have (or prefer not to manage) a brokerage account.
- Transparency: Donors and nonprofits now have full visibility into the value and status of each stock gift. With dashboard reporting and notifications, gift reconciliations and donor stewardship are much easier.
In conclusion, market conditions have undoubtedly made charitable giving more challenging. However, the possibility of democratized stock gifting has the potential to revolutionize the way we give and support the causes we love.
Now more than ever, growing stock gifting should be at the top of the To-Do list for nonprofits large and small. It’s time to open the aperture and help donors give smarter and have greater impact with ease.
To learn more about stock gifting and how to launch and grow your own program (no brokerage required) please visit us at https://donatestock.com/for-nonprofits.
GiveSmart partners with DonateStock, the leader in charitable stock gifting to make charitable stock gifting available as a referral offering to thousands of nonprofits. This blog was written by Steve Latham, co-founder and CEO of DonateStock.