Your Guide for Stock Gifts to Nonprofits

Photo of Claire Machado from the company Overflow.

Stock gifts are becoming ever more important for nonprofits. A key part of Responsive Fundraising is enabling your donors to give in the ways they want to give, which means that part of being responsive is ensuring that you are equipped to leverage stock gifts. 

In this episode of The Responsive Weekly, Kelly Cristaldi and Claire Machado discuss how nonprofits can leverage stock gifts to be more responsive and grow generosity. Watch the full recording here or read on to learn more!

The Quick Summary

Why are stock gifts beneficial?  

Did you know that 90% of wealth is held in stocks and other assets? Stock gifts are one of the most tax-beneficial ways for donors to give and open a new, responsive method of accepting donations by your supporters.

Not only is a stock gift tax deductible, but if a donor directly donates the stock to your organization, they can avoid capital gains taxes. This is a huge benefit for many major donors in particular. However, not everyone knows this, so many donors will liquidate their stocks first. Educating donors on the benefits of stock gifts is financially optimal for you and your donors. 

In fact, the vast majority of Americans hold their wealth in non-cash assets, which include stock, real estate, etc. If your nonprofit is only focused on cash, you are looking at a smaller bucket of generosity. By leveraging stock gifts, you open your nonprofit up to more options. At Overflow, they have found that the average stock gift is $10,000. Even if nonprofits don’t get dozens of stock gifts a year, even just one is worth it. 

Stock gifts are a great way to partner with your supporters and be responsive. As economic conditions change, only accepting liquidated gifts means you are asking your supporters to possibly be looking at their grocery money or other budgetary items and give to you from that category.

People want to continue being generous while maintaining their own needs, and stocks are a great option.

Obstacles Your Nonprofit May Encounter

Many nonprofits don’t invest in stock gifts because they don’t seem to come up very often. Some major donors may have financial advisors helping them with their stock gifts, but for most people, education is lacking. Stocks are becoming more common assets, but younger donors and those without financial advisors need help understanding the process.

Historically, it has also been incredibly difficult to make stock gifts. Donors had to go through an individual broker and complete several manual steps in a long process. Even donors interested in stock gifts often did not have the time or resources to navigate that process.

Making Stock Gifts Easier

In the for-profit world, companies have worked to make it easy for consumers to spend money. Credit card information is saved and stored and your devices. You can purchase items with just a click and never think about how the money is processed on the back end. Donors deserve this type of simple process when giving to your nonprofit

Making it easy for donors to give stock gifts is why companies like Overflow exist. With Overflow, nonprofits can access a simple URL they can share with their donors. Donors no longer have to go to their brokerage firm and work through several manual steps. That URL leads donors to start making a stock gift, and Overflow works with them the rest of the way to make it as simple as possible for your donors. 

Regardless of what technology you use, as a nonprofit, you should make it simple for your donors to show generosity however they want. Part of that is educating yourself about stock gifts and ensuring your team has the necessary resources. Take advantage of the educational resources already out there so that you have a basic understanding of stock gifts. 

Once you feel comfortable with the general concept, educate your donors and empower them with a simple process. Do things such as: 

  • Create a robust FAQ page that includes information about stock gifts. 
  • Add in the information or a URL right on your giving page
  • Prepare your Major Gifts Officers to have conversations about stock gifts in their conversations. 

How to Ask for Stock Gifts 

Making any big ask of your donors is a daunting task. Before diving into details, ensure you effectively engage in the Responsive Fundraising framework. This will help you be confident that you are making the right suggestion at the right time.  

Once you are ready to make the suggestion, you can start discussing with them how they want to donate. However, remember that for many major donors, fulfillment will come through their financial advisors. They may not know during your conversation exactly how they will make the donation. Provide them with the options to remain flexible, and show that you will make any path easy for them. 

Partnering with companies like Overflow can make these conversations easier. They will walk your donors through the process for you. Also, they have a financial advising service that makes it even smoother for your donors’ financial advisors to ensure the stock gift is processed. With intentional partnerships, your nonprofit does not need to be the expert on everything for your donors. You can still provide donors an excellent experience, but not overload your staff.

After the Gift is Made 

Understanding the timeline of stock gifts is important for nonprofits to know. Stock gifts can take anywhere between one day to two weeks to process. The timing differs depending on each brokerage’s processes. Some firms are more efficient than others, but the date you receive that stock gift is important. According to the IRS, stock gifts are only considered “given” when the nonprofit receives the gift into its account. 

Outside of those logistics, nonprofits should consider how they will nurture the ongoing relationship with these donors. Quickly acknowledging the gift is the first step. Stock gifts have different requirements for acknowledgment letters than cash gifts. Tools like Overflow can automate this process and ensure compliance with those guidelines. 

Go beyond the required acknowledgment and show the impact of the gift. Tell your donor what your nonprofit did with that stock gift. Use your nonprofit CRM to nurture that relationship and engage further. If a donor gives you a stock gift, they will likely become lifelong supporters. Thanking them well and multiple times is the first step to cultivating that deep relationship. 

Key Takeaways

Wherever you talk about donations, include information about stock gifts. Give your donors the option to give however makes sense for them. Your nonprofit should be prepared to educate donors on stock gifts as needed, but you always have the option to partner with companies like Overflow, which can make that process easier. Implement responsive fundraising to give your donors freedom over their gifting and grow generosity

Keep learning

Subscription philanthropy: avoid these mistakes

Subscription philanthropy: avoid these mistakes

You may not have heard the phrase “subscription philanthropy” before, but I guarantee you are aware of the subscription economy. Understanding the subscription economy and translating that to your fundraising…
Donor Retention: The Ultimate Guide for Nonprofits

Donor Retention: The Ultimate Guide for Nonprofits

Unlock higher donor retention rates with Responsive Fundraising. Learn how the right tools can deepen relationships and maximize your nonprofit's impact.

Grow generosity with Virtuous.

Virtuous is the responsive fundraising software platform proven to help nonprofit organizations increase generosity by serving all donors personally, no matter their gift size.

“Virtuous truly understands nonprofits and the importance of our mission. And their open access to data and built-in custom reports gave us access to the data we need.”
Todd Shinabarger​
Chief Information Officer