Unlock Millions in New Funding via Stock Donations

Nonprofit organizations, higher education institutions, and healthcare foundations are embracing stock gifting to diversify and grow funding as the rebound begins from two challenging years for charitable organizations. If you’re new to stock donations or want to expand your program, you’ll need some context (and some charts) to illustrate how you can unlock millions in new funding by making stock gifting fast, safe, and free for donors.

After charitable giving hit a record high of $516 billion in 2021, momentum stalled in 2022. Inflation, higher interest rates, and economic uncertainty, combined with a shrinking pool of donors, resulted in the first contraction in giving in more than a decade (down 13%, adjusted for inflation.) Giving USA reported that charitable giving was down another 2% in 2024, when adjusted for inflation.

The pullback in cash giving is forcing fundraisers to seek new ways to diversify and grow revenue. At the top of the list is a renewed focus on non-cash giving, and within this asset class, stock represents the biggest opportunity.

Why Stock Donations?

Gallup recently reported that 61% of Americans now own stock, including 66% of those over 50 and 84% of households earning $100,000 and above. Combined, this group owns $40 trillion in stocks, exchange-traded funds (ETFs), and mutual funds.  The top 10% of investors represent $50-$75 billion in potential annual funding for nonprofits.

Gifts of stock offer benefits to both the recipient organization and the donor.

1. Tax savings: Appreciated stock represents tax advantages for donors who support nonprofits.
2. Donors can avoid capital gains tax and deduct the current value of stock held for more than 12 months. 
3. Pre-tax stock gifts allow the recipient organization to keep the proceeds that would have been paid in taxes had the donor sold the stock before donating the proceeds.
4. Increased size of gifts: Stock donations tend to be larger gifts than cash donations, averaging more than $6,000 in 2023 and more than $7,000 in 2024.

The implications for organizations: most (if not all) midlevel and major donors own appreciated stock and donating stock versus cash offers substantial savings for donors. For these reasons, stock gifting should be a fundraising priority for organizations of all sizes.

Why Now?

After its amazing resurgence, the stock market is at or near all-time highs. In just the past 10 years, the S&P 500 has almost tripled while the NASDAQ 100 has almost quadrupled, representing trillions in unrealized gains held by donors. 

When the markets soar, millions of investors seek to harvest gains, mitigate risk, and reduce concentration in stocks that have had outsized gains over the past 5-10 years. Investors generally have two options:

1. Sell the stocks and pay a tax on the gains
2. Share their gains tax-free with the causes they support

Those in the know are taking advantage of the tax benefits to donate stock to the causes they love. But not all your major and midlevel donors are aware of the benefits of donating stock. Here’s how to get started:

• Start by promoting stock gifting on your Ways to Give page and Donate page, letting supporters know you’re now accepting stock donations.
• Then, create an email marketing campaign to encourage and inform donors about the benefits of donating stock to charity, with special emphasis at the end of the year to remind them of the tax advantages.
• To make it even easier, check out the list of the best stocks to donate and share with your donors the reasons why these stocks are particularly ripe for gifting.

Is This Your Year for Stock Donations?

There might never have been a bigger moment than now for fundraisers seeking to diversify and grow via non-cash giving. As the charts below show, nonprofits, healthcare foundations, and higher education institutions are starting to get the message.

At the midpoint of 2024, stock gifts on the DonateStock platform (representing thousands of organizations) were up 65% while proceeds from stock gifting were up 285% vs. 2023.

A New Way to Grow Stock Gifting

While the donation of stocks used to be a painstaking, manual process for donors and the charitable organizations receiving the proceeds, it’s now accessible and easy for everyone. Gone are the days of sharing your brokerage details with strangers, requiring donors to complete paperwork, and manually processing, reconciling, and acknowledging stock gifts. Several tools can help you, including software from my company, DonateStock. When your donor submits a gift via online donation form, they can initiate an online gift of stock in minutes at no cost.  From there, it’s effortless for your donor and for your gift processing team:

1. Your donor selects their organization of choice on the online donation form provided by a stock donation tool integrated into your donor management system, such as Blackbaud Raiser’s Edge NXT®
2. The stock donation tool, such as DonateStock, automatically and securely sends instructions to the donor’s broker and notifies the donor and the charitable organization
3. The donor’s broker transfers the stock to the recipient’s account
4. The stock is received, reconciled, converted to cash, and the proceeds are distributed to your organization
5. Your donor is notified the stock was received and is sent a receipt for the gift

Also consider donor satisfaction. Stock gifting results in almost 25% of stock donors making repeat gifts. In 2023, stock donors made an average of 3.7 gifts each, indicated in the chart below.

For organizations that are Blackbaud customers, it couldn’t be easier to get started. It takes just a few minutes for your organization to automatically process and acknowledge stock gifts efficiently and transparently. Activate DonateStock in minutes one of two ways:

• Within Raiser’s Edge NXT® with a simple-to-implement extension
• Directly, by finding and claiming your page at https://donatestock.com/for-nonprofits

To learn more or to get started with fast, safe stock donations, please visit the DonateStock page in the Blackbaud marketplace.