Stock Giving for Fundraisers: A New Way to Nurture Major Gifts

Are you searching for new ways to engage major donors?

We’re always looking for new and responsive ways for donors to give – but have you ever considered stock giving? Check out this session from Claire Machado of Overflow to learn about the benefits of enabling stock giving for your donors – and how to nurture and steward major donors.

Watch the Full Recording Here

Top Takeaways

  • Stock giving doesn’t have to be complicated or burdensome. Overflow works with a donor’s brokerage to streamline stock giving.
  • On average, nonprofit organizations accepting stock giving receive gifts over $10,000 and have numerous tax benefits for a donor.
  • When nurturing a donor, make it well known that you accept more than just cash gifts – either during conversations or on a giving page or an FAQ page.
  • Learn more about receiving stock gifts as part of your fundraising strategy by downloading this checklist from Overflow!

Transcript:

Kelly Cristaldi

I’m Kelly Cristaldi, I’m the Senior Product Marketing Manager here at Virtuous and you’re probably asking yourself, “Wait, where’s Megan?” Megan is on leave this week. She will be back in two weeks but I’m so excited today. We are joined today by our lovely partner Overflow and Claire is joining us here to talk all about stock giving. But you’ve probably seen here on the question of the day is let’s talk about stock giving to increasing generosity.

Claire Machado

Hey, thanks so much for having me. Yes, I am a Senior Customer Success Manager at Overflow, so I get a chat with all of our nonprofits every day about stock fundraising. So super excited for this conversation. 

Kelly Cristaldi 

It’s super exciting and it’s really timely too because stock giving is becoming ever more important for major gifts for stewarding major donors. And here at Virtuous, we’re always looking at new and improved ways to be responsive fundraisers and stock giving is quickly becoming another new way, another improved way, I should say, way, of enabling donors to give, which is fantastic. So this is going be such a riveting topic for everyone today. 

Claire Machado

Yes. But I think it really is so timely with giving Tuesday obviously end of year giving come December. So let’s get started. 

Kelly Cristaldi 

Awesome. Claire, tell me a little bit of a high-level synopsis of stock giving for those that are joining us but may not be as familiar with it. 

Claire Machado

Yeah, absolutely. So stock giving, if you don’t know, is one of the most tax-beneficial ways to give. And the reason for that is that it’s not only possible to deduct the gift as a charitable deduction on income taxes so that would be just like cash.

But with stock, what’s really unique is that if a donor went to donate it directly to your organization, they actually can avoid capital gains taxes and that can be up to 20% of the gains.

So what that basically means is that a donor can donate it directly, avoid the capital gains, and not everybody knows about this actually. And so a lot of people will liquidate or sell their assets and then they have to owe the IRS those capital gains taxes, which is unfortunate. So the more you can educate people about this way of giving, the better it is for their financial situation. 

Kelly Cristaldi

Absolutely. And I that’s something that we all think about too is the capital gain tax and how much that really can impact both fundraisers and those that are holding the stock. But if someone were interested in learning more about the tax benefits larger than say the capital gains, what other benefits could someone see by say, donating their stock to an organization? 

Claire Machado

Yeah, I think so beyond just tax benefits, what’s really incredible is that actually, 90% of Americans hold their wealth in non-cash assets. And so of course that includes stock, it’s also real estate and other things.

But for fundraisers that are only focused on cash, that’s a very small bucket of wealth that you have access to. And so when you’re asking donors to give from other assets where they have maybe their overflow, their extra, they can be more generous. And so I really think it’s an incredible opportunity to partner in philanthropy with your supporters and just say, “Hey, we have this other way of giving that’s not only tax beneficial for you, but you know, don’t have to give from your grocery budget, your childcare budget, you can actually give from your extra and be even more generous in that way.” 

Kelly Cristaldi

Oh that’s so great. And I know so many of us are looking at things like that right now where it’s like what am I allotting to my grocery bill, to my childcare, to my mortgages, and things like that. But I don’t want to give up that philanthropy that we’ve really been leaning into these past couple of years. And of course, stock giving is an excellent way to do so. But given that it’s such an easy way, a very generous way of helping a non-profit, why aren’t more doing that path? Why aren’t more people saying to themselves, “Oh yeah, I could totally donate my stock and still continue to be a really generous person?” 

Claire Machado

Yeah, it’s a great question and probably a lot of people on this call are asking that because they’re like, we’ve only seen two or three stock donations, maybe zero. And it’s really twofold. I think the first piece of it is that there is a top tier of donors that has their financial advisor telling them, “Hey, this is a great way to give, you should definitely give via stock” but for everybody else, they don’t necessarily know about these benefits.

So I think it’s definitely an education piece now that people are being compensated in stock from their tech companies. They also maybe are getting into the stock market with Robinhood and other apps that it’s really become democratized a lot more people have these assets but again, they aren’t necessarily the class that is knowing from their financial advisor, or tax advisor to give.

I think awareness is the first piece. And then really the second piece is it’s previously been really difficult to give these assets. Somebody would have to go to their particular brokerage’s website somehow find the stock transfer request form, download it, fill it out by hand, so print it, and fill it out by hand, hopefully correctly. That’s actually a big thing. And then fax or mail it in. So you know, think about the text, the tech millennial that’s being compensated in stock and they’re just like, yeah, I’m not gonna do that.

Claire Machado

Exactly. So that’s actually why Overflow was founded because we have to make this more modern, bring it into the 21st century, and just make it easy and seamless because millennials are much more likely to give if you make it convenient for them. 

Kelly Cristaldi

Absolutely. I mean it’s no different than when I go online and shop and it’s so easy nowadays to say, pay via credit card that’s hosted on my phone to PayPal to any major credit card company. Or even at the grocery store nowadays where I can go and say, “Oh, here’s my phone, here’s scan it, let’s pay”. That’s so easy.

It should be just as seamless to take stock gifts too and not go through all of that paperwork. And to be totally fair, I think the last time I saw a fax machine was when I was in college and I was working for a law office. They put so many hurdles into place, but how can someone go to say their broker, their financial advisor, and say, “We’re really interested in starting to give generously via our stock options to our preferred nonprofit? We feel super passionate about this and we understand there are a lot of tax benefits to it”. It seems like there’s an awareness and an educational kind of barrier there?

Claire Machado

I really think it is partly the responsibility of 501c3 organizations that are interested in tapping into this incredible pocket of wealth to start to educate people about it. It’s again that education piece of the tax benefits but then also to make it easy. And so what Overflow offers is just like a URL and so you could send it out to your donors, you can put it on your website, whatever makes the most sense, and then people just easily initiate it through there. That actually means that donors don’t have to go to their broker, they just can give directly through the link which is just so much more what they expect with online giving these days. I think that’s really how we bridge that gap, we put it on your giving page where it’s super accessible and easy to do. 

Kelly Cristaldi 

Absolutely. Or to that as well, putting on FAQ page too for on your website, say for example you’ve got a really robust FAQ page on your website that details how you allot certain monies for campaigns, what your tax documents look like, how progress is being made on different projects and campaigns, why not add another portion on there that says we also accept donations X Y Z. I even feel like if it’s a major gift officer that’s talking maybe with a donor that they’re stewarding, making that an option that you bring up in conversations in your phone calls or emails to them, it’s just really light touches there to kind of reinforce. 

Claire Machado

Absolutely. And I would say too with that actually the average stock donation through Overflow is $10,000. So we are talking more about some major donors that wanna be generous in significant ways. And so a lot of times we do work with major gift officers just to coach them on how to incorporate this into their conversation. And a big reason for that is because it shows that you’re being that incredible partner in philanthropy and you’re offering ways to give that make sense for the donor financially. And it can be as simple as just saying, how would you like to give this gift? We have a secure portal online where you can give stock if that makes sense for you financially. I know it can be tax beneficial, it doesn’t have to be pushed one way or the other, but it’s just letting them know that it’s a way of giving that I think donors really appreciate. 

Kelly Cristaldi 

What are other ways that a major gift officer or a fundraiser can more easily approach the option of stock giving as well? We talk about that a lot here at TRW and at our various summits is getting over that painful awkward hurdle of making the ask. Even though we know that people want to give generously and they are ready and able and say they’re 99% to the finish line, we’re still like, “are they though? Do they like us that much to give?” How can we better enable fundraisers to make that ask for stock gifts? 

Claire Machado

It’s a great question and I mean I think you already said it somewhat, that we do have to get them to that 99%, which is what we call inspired giving, right?

Donors aren’t going to give until they’re inspired by your mission and a hundred percent behind it. And so that’s of course the first part of the job and we always wanna start there because we don’t just want to start with we have all these great ways to give.

What I’ve found is that a lot of times those major donors actually give through their financial advisors, so they may not even be fully aware of how they wanna fulfill the gift at that moment. So if you can even say, not only can you go to this link for you to initiate stock, but Overflow actually has a financial advisor experience because we saw that that was so necessary for the market to empower financial advisors to give stock on behalf of their donors. And so I think that also is a great way to say we’re here for you in whatever way it makes the most sense. And if that means that you want to just send this to your financial advisor, here it is.

Kelly Cristaldi

That’s awesome. And speaking of brokerages, are there certain brokerages that Overflow maybe doesn’t work with that, or is it a very democratic

Claire Machado

Yeah, I love that question. So we have quite a few brokerages, all of the major ones. So you’re thinking Charles Schwab, Fidelity, all of those are what we call directly supported on the platform. And so that means you can just give through our normal self-service experience online and it’s super easy. You are done in five minutes.

But what’s awesome is we actually have an incredible operations team for our donors that can handle gifts from other brokerages. So there are some brokerages that have very complex requirements that we still need to work with, we can’t get around them, or just a more obscure brokerage that’s just a little bit smaller. And so we’ll just work directly with your donor to facilitate that gift so they can still go through the experience online. And then we just follow up with the few other required information that we need, but still very seamless. 

Claire Machado

And what we’ve found is actually it’s one of the best benefits for donors because if they were to go what we call the old way where they’re printing out that form and filling it out by hand, a lot of times what happens is people just give up halfway through because there are these extra requirements that they just don’t really know what to do with and then they’re just like, this is too much work, I’m done. And so when our team can step in and help facilitate those more complex gifts it’s just a huge value add and it will actually mean that the significant gift is fulfilled. 

Kelly Cristaldi

For those smaller brokerages, of course with our larger, more nationally known ones, I would estimate the time to process and receive the gift is fairly minimal. But how much time for those smaller shops like mom-and-pop style brokerages, are we looking at a number of business days, or is it just a little bit longer time period a week or two? 

Claire Machado

Yeah, so I would say it actually doesn’t really matter how big the brokerage is, it’s just how efficient the brokerage is . And so we see stock transfer timelines anywhere from one day to two weeks. And the reason that’s important is actually the IRS doesn’t recognize a stock gift as having been given until the 501c3 organization receives it into their account.

For example, somebody may initiate it on December 1st and if it does take those two weeks the nonprofit would receive it, let’s say on December 15th, or 16th and that’s when the gift is recognized. And so we try and do everything we can to speed that up, but it ultimately is up to the brokerages and how fast they’re processing. 

Kelly Cristaldi 

So basically the rule of thumb here is if you’re going to accept stock giving for year end, probably start looking at it within the next week or two to start opening that up. 

Kelly Cristaldi 

We’ve kind of talked about the process of receiving the stock gifts, and how we can steward donors into pursuing that as a method of expressing their generosity. How can we expect a major gift officer to continue to nurture that relationship so it’s not just a one-and-done kind of transaction per se, but how can we continue to steward and nurture and perhaps become a lifelong major donor? 

Claire Machado 

Yeah, absolutely. I think the first thing is just a quick acknowledgment of the gift and really just letting people know that right away, hey, we are so appreciative of your gift and so overflow actually automates the acknowledgment letter for you, which is really helpful because there are some specific stock guidelines that we have to have in the acknowledgment letter that’s a little bit different than cash.

And so you could just easily send them out and that’s done. But I would also say we highly recommend going beyond that and showing the impact that that gift made especially if it’s a significant gift. Donors want to know, Hey, I gave what happened to it? Where did it go? How was it used? Who was impacted by it? And so having some sort of reporting structure back, which I think Virtuous can really help with the responsive fundraising, it’s a full cycle of fundraising and it definitely doesn’t stop just with that gift. 

Kelly Cristaldi

So often in that block of time, after our first gift is initiated, that is the time to really start nurturing that relationship. And with most, there really is no hard and fast rule for say smaller, $75, $50 gifts and when you need to send a receipt, but with stocks, there actually are a lot of rules around that. So that’s great that Overflow handles that as well.

Claire Machado

Absolutely. Absolutely. I hundred percent agree with that. 

Kelly Cristaldi 

Do you have any other best practices or tips and tricks to share with everyone? 

Claire Machado

I think the big thing is really just to include stock wherever you talk about cash. That’s really my big rule of them is that it should be just presenting options to your donors so that they can choose what’s best for them. And so again, it isn’t just pushing one way or the other that doesn’t really make sense. You’re still gonna see the majority be cash gifts, but you’re gonna be able to unlock higher value gifts in stock. And so presenting both I think is gonna be your best way to go. 

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