Philanthropy is at an inflection point and fundraisers are looking opportunistically beyond cash and credit as their sole sources of funding. Persistent inflation and higher living costs have resulted in fewer dollars left over each month, making it harder for most households to support their favorite organizations as they did in prior years. Consequently, it’s going to be a challenging giving season for organizations relying exclusively on cash and credit.
The good news is that other sources of funding are readily available. Organizations that embrace non-cash giving stand to capitalize. Consider the following:
- More than half of US households own $30 trillion in stocks, mutual funds and related investments. That’s a big piggy bank.
- Another $250 billion sitting in Donor Advised Funds, just waiting to be distributed.
- More than 6 millions retirees over 72 can benefit from Qualified Charitable Distributions (QCDs) to reduce the taxes on their IRAs (via required minimum distributions).
As Russell James recently discovered, cash is not king when it comes to charitable giving. The table below shows how nonprofits that receive non-cash gifts (in addition to cash) have been much more successful in growing their top lines.
Perhaps now more than ever, nonprofits need to lean into non-cash giving in the form of stock, DAFs and QCDs. Here’s a quick overview of each:
1) Donor Advised Funds
There are about 1.3 million DAF accounts worth $250 billion in assets. The average DAF account is almost $200,000 with an average grant of more than $5,000. Per the IRS rules, contributions must be distributed within 5 years so simple match says that DAFs should be paying out $50 billion per year (much more than what is actually distributed).
2) Qualified Charitable Distributions (QCDs)
As noted more than 6 million retirees over 72 have retirement savings and most will be taxed on on their savings via Required Minimum Distributions (RMDs). The good news is that the IRS allows them to offset up to $100,000 in annual RMD income by making QCDs, provided they are made directly to 501c3 charitable organizations. This represents another $15 billion in potential funding each year.
3) Appreciated Securities (Stocks)
More than 60 million households own stock as investments or via compensation. Despite market volatility, the S&P is less than 10% from its all-time high. Moreover, the most widely held large-cap stocks (Alphabet, Apple, Nvidia, Microsoft, Meta, Amazon and Tesla) are all up 300%-1000% over the past 5 years. Investors over the age of 45 tend to have substantial portfolios that should be worth $75 billion in annual stock gifting. Unfortunately stock gifting has been largely untapped to date.
Historically, stock gifting has been afforded to the wealthiest 1%. Today, the playing field has been leveled and all donors can gift stock with ease in minutes with solutions offered by DonateStock.
Together these 3 non-cash sources represent $100-$150 billion in untapped funding for nonprofits of all sizes. The path to unlock DAFs and QCDs is simply reminding donors that you accept contributions from these assets. While stock gifting used to be inaccessible to small nonprofits and difficult for larger ones to scale, those barriers have been removed through DonateStock’s Easy Button.
In summary, while recent headwinds have made fundraising more challenging for most nonprofits, non-cash giving is accessible to all. Now more than ever, stock gifting, along with DAFs and QCDs should be at the top of the To-Do list for nonprofits of all sizes. Those who lean sooner stand to gain the most, so let’s embrace this change and ensure that the causes that matter remain strong in these uncertain times.
- [Case Study] World Kitchen Increases Stock Gifts by 15% with DonateStock
- [Webinar Recording] Rethinking Fundraising: Roundtable Discussion
- HOW TO: Easily Accept Stock Donations on Your Nonprofit’s Website – and Why You Should