Written by Steve Latham, co-founder and CEO of DonateStock
Fundraisers are facing numerous challenges that are weighing on cash giving. Meanwhile non-cash stock gifting represents billions in new funding. Best of all the path to unlocking that revenue is open to all.
Charitable giving eclipsed record levels in 2020 and 2021. Fueled by stimulus spending, a surging stock market and groundswell of generosity, cash giving was abundant. Then in 2022, everything changed.
A Perfect Storm
Due to a confluence of events, charitable giving fell by $20 billion or 13% in 2022, due to several factors:
Fewer donors: Two decades 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.
40-Year Record inflation: 8% inflation put significant pressure on family budgets. With fewer dollars left over, there was simply to donate 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 – reaching a new all-time high.
While cash may feel scarce, the assets in our investment are abundant. Today, half of US households own stock and with the markets have rebounded nicely this year. This represents a vast untapped source of funding for orgs of all sizes.
Hello Stock Gifting!
The biggest source of non-cash giving is appreciated stock, representing $30 trillion in household accounts. Stock also offers donors 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 I write this, the S&P 500 is near an all-time high, along with the stocks held by millions of donors including Alphabet, Apple, Nvidia, Microsoft, Meta, Amazon, and Tesla. Conservatively speaking, stock represents an incremental $50-$75 billion in untapped funding for nonprofits.
The problem with stock gifting
For decades, 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 found it to be extremely painstaking and time consuming.
Stock gifting also presented operational 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 rarely comprises more than 1-2% of most fundraising budgets.
Breakthroughs in stock gifting
Due to recent innovations, stock gifting is now accessible and easy for all donors and nonprofits. Here is a summary of how stock gifting is now easy for all parties:
- 🚀 Modern donor experience: what used to take hours can now be done in minutes through our Easy Button for Stock Gifting™. 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.
- ✅ Universal access: 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 recipient orgs that do not have (or prefer not to manage) a brokerage account.
- 🔍 Transparency: donors, advisors 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.
While market conditions have undoubtedly made charitable giving more challenging, democratizing stock gifting has the potential to revolutionize the way we give and support the causes we care about.
Now more than ever, growing stock gifting should be a must-have for all nonprofits, large and small. By helping donors give smarter and have greater impact, fundraisers can diversify and grow revenue for years to come.
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.