Why Nonprofits Are Stocking Up on Stocks (and Other Asset-Based Gifts)

By David Schwab, Funraise’s Director of Growth & Marketing
Bring your vision into focus with Funraise, innovative fundraising technology offering state-of-the-art solutions built to elevate your impact.

As a nonprofit, you’re singularly focused on making the world a better place by working toward your mission. But that mission requires funding, and that funding requires fundraising. So, here we are, always wondering what else we could be doing to raise a few extra dollars. And more and more, the answer to that all-important question is to look beyond cash and credit by focusing on asset-based gifts—especially stocks.

If you’re interested in investing in this growing trend, read on for the many reasons that nonprofits are embracing asset-based gifts.

It means more revenue

A 2016 study found that nonprofits receiving only cash gifts grew an average of 11% over a five-year period while those receiving non-cash gifts in the form of securities grew 66% (Professor Russel James III). In other words, nonprofits that accepted stock gifts grew their contributions six times faster than those that only accepted cash. That’s some solid proof that organizations that are only accepting cash or credit donations are limiting their options, which is the last thing nonprofits want to do in a competitive market.

Stock gifts = major gifts

As a nonprofit, you welcome gifts big and small with open arms. But let’s be honest: major gifts are #endgoals. They let you do big things and make big changes. The average stock gift in 2021 was $5,035–and DonateStock normalized that impressive number by removing outliers. When they included large gifts, the average was more than $8,000! Why? Because a whopping 93% of wealth in the US is held in non-cash assets (US Census Bureau), stock gifts tend to be quite a bit larger than cash ones. All told the median stock gift in 2021 was $1,420 (DonateStock), while the average one-time cash gift in 2022 was $115 (M+R). That’s a massive difference.

It makes donors happy

And for multiple reasons. First, it’s a smart choice financially. It’s no secret that there are significant tax savings associated with donating stock. In addition to deducting the fair market value for their donation, donors can say farewell to that pesky capital gains tax.

Next, donating stocks is convenient. It used to be a major pain in the patootie, but thanks to cutting-edge platforms like DonateStock and Funraise, it’s a breeze. Donors are busy people, so they want to donate how they want. By prioritizing options during the giving experience, nonprofits are making donating much more convenient. And everyone knows that greater convenience means more conversions.

And it’s a smart investment strategy

For most donors, nonprofit donations are strictly separate from the rest of their finances. But thanks to those aforementioned tax benefits, asset-based giving can take you from needy neighbor to strategic partner. When you engage donors through non-cash giving, you become a part of their investment strategy rather than just another charitable cause, allowing them to see you in a whole new light.

Grow your network and increase accessibility

Despite the occasional membership perk, nonprofits aren’t exclusive clubs. They want to grow their network as much as possible, and they want to welcome everyone, everywhere into the fold. Accepting asset-based gifts is one way to bring that beautiful dream closer to reality. Consider this: 158 million Americans report owning stock—over 60% of the population (Gallup). That’s up from 56% in 2021 and 55% in 2020. With more ways to give, more folks at more income levels with more diverse backgrounds can get involved.

Diversifying revenue streams is just good business

At this point, most nonprofits have realized that they need to run like a business if they want to achieve their mission. That means you need to be smart about your finances by protecting yourself from the unpredictability and uncertainty of the outside world. The best way to do that? Diversified revenue streams. It takes planning and some upfront investment, but more and more nonprofits are realizing that it’s well worth the effort. By diversifying your funding through non-cash assets, you ensure stability in the years to come.

It can make getting grants easier

Landing that big grant is a major thrill for a nonprofit, but the grant application process is a whole lot less fun. One thing that can up your odds, however, is proving your long-term organizational health—and a diversified funding stream means greater stability in the years ahead.

Asset-based gifts are good for nonprofits, good for donors, and good for the world—and more and more, charitable organizations are standing up and taking notice. If you’re ready to take stock of your options, you can take advantage of asset-based giving and up your fundraising game with Funraise, which lets you tap into the full power of stock giving with DonateStock.