Accepting Stock as Donations: Do It!

November 14th, 2022

Stock transfers as a means of donating have been growing in popularity over the past several years. Why?

Savvy donors appreciate the option of being able to donate with stock because it offers them additional tax benefits. Savvy nonprofits understand the value of non-cash assets as well as the opportunities that arise when they offer as many ways as possible for donors to contribute.

Accepting stock transfers also can boost overall fundraising growth. In fact, a Texas Tech University study found that “fundraising growth trends were up to 55% higher for nonprofits that allowed non-cash donations such as stock as viable donation options along with more traditional cash donations.” 

And even though the stock market is in a lull right now, you shouldn’t back off asking donors for gifts of stock. In fact, asking for gifts of appreciated stock should be part of your year-end giving plan.

If you’re not promoting stock gifts, here are 3 important reasons why you should.

  1. Stock donations offer significant tax benefits for donors. When donors give appreciated stock, they can avoid capital gains tax of 18.8-40%. Let’s assume a donor paid $500 for stock and it is now worth $2,500. If the capital gains tax rate for the donor is 25%, the donor avoided paying $500 in capital gains tax.
  2. Accepting stock increases gift size. Gifts of stock tend to be larger amounts than the donor likely gives in cash. When donors give appreciated stock, they can deduct the full market value of the stock, and the organization receives the full amount. Using the same example above, the donor who is donating $2,500 worth of stock gets to deduct $2,500 from their personal taxes. Assuming an estimated personal tax rate of 30%, the donor saves $750 from the charitable deduction on their taxes.
  3. Stock is where the money lives. Cash only makes up about 10% of the world’s assets. Most wealth is tied up in non-cash holdings like stocks, IRAs, and others. Donating non-cash assets is often easier for the donor since it doesn’t take away from the donor’s income or cash assets. 

How should your nonprofit organization promote gifts of stock?

Year-end is an especially good time to remind donors that gifts of stock are accepted.  Here are a few ways to get the word out:

  • A special insert in your direct mail.  Including a call-out in your year-end effort helps draw attention to stock giving. Make it as easy for your donor as possible by including your brokerage firm’s name and address, account number, your tax ID number, and phone number and email address for the contact at your organization, in case the donor has questions.
  • A feature story in a year-end newsletter, magazine or e-newsletter. We all love a good story and telling the story of how one generous donor’s stock gift made an impact will go a long way to inspiring future gifts of non-cash assets.
  • A P.S. in the ‘thank you’ letter. It’s true that donors don’t always read everything the nonprofit sends them.  But donors are more likely to read their thank you letters.  Use the P.S. to remind the donor that your organization graciously accepts gifts of stock as well as gifts from their DAF or IRA. If you can, offer the contact information for someone at the organization the donor can contact if they need help.  
  • Website homepage call-out.  As year-end approaches, donors start thinking about making their larger, annual contributions.  Everyone is busy, so make it as easy as possible for the donor to find the information they need. Feature “other ways to give” on your website homepage, and include the links and information the donor needs.  (Make sure the links work and the information is up-to-date).  This is a great place to highlight gifts of stock or appreciated assets, gifts from their DAF or IRA, car donations, cryptocurrency, and any others.     

It’s not too late. Let your donors know the many ways they can support your important mission with gifts that will have a lasting impact.

Category: Resources