It’s September, and it’s almost Christmas. I know this statement can be irritating; if you’re like me, you are annoyed by the Christmas promotions that are happening earlier every year.
But here is one area you need to be thinking about and planning for right now as it relates to the donors on your caseload. In some cases, you shouldn’t wait until the end of the year – you need to act now!
I’m talking about gifts of appreciated stock – one of the most ignored areas of potential revenue for non-profit organizations.
Take a look at these facts from an article written by Holly Hall in the Chronicle of Philanthropy:
- At the Fidelity Charitable Gift Fund, gifts of appreciated stock, both publicly and privately held, accounted for 57 percent of donated assets in the first half of this year, up from 43 percent during the same period in 2013.
- For the first time since the Great Recession, donated securities at Fidelity accounted for a higher percentage of contributions than in the first half of 2008, right before the economic crisis, when they stood at 54 percent of gifts.
- At the Jewish Federation and Endowment Fund, in San Francisco, stock gifts for the fiscal year ending June 30 are up by more than 12 percent over the previous year.
- Given the stock market’s growth since 2012 and a resulting rise in household wealth, charitable giving probably reached or surpassed pre-recession levels in 2013 — or it will this year. Experts had predicted that charitable giving by individuals would not reach pre-recession levels until 2022.
There is no doubt that with the stock market at an all-time high, if you aren’t talking to your donor about making a gift of appreciated stock you are missing out on a lot of revenue for your organization. And here’s the very surprising fact that Holly points out in her article:
“Many wealthy people don’t understand the advantages of giving appreciated stock versus cash. They can take an immediate tax deduction for the full market value of the stock and also avoid the capital-gains tax they would owe by cashing in the securities. Then, using the cash they might have otherwise donated, they can repurchase the same stock at a higher cost basis for capital-gains purposes.”
I know this is complicated. And I barely understand it myself since I am not a financial guru or understand how these things work. But the bottom line is this: the stock market is up, there are financial advantages to giving appreciated stock, and many people who have that stock to give don’t understand those advantages.
Here are three easy steps you should take this week to get moving on this:
- Meet with your planned giving person (if you don’t have one, see if your accountant or auditing firm will talk to you about this) and get a brief education on how this works. I’m going to do the same thing. It is important to understand the mechanics of donating appreciated stock so you can put this messaging in your communications.
- Create messaging around this opportunity that is easy to understand.
- Design communication strategies to your caseload donors that help each one of your major donors understand the importance and advantages of donating appreciated stock. You should make sure to do three things in this area. First, find a way to talk to each donor on your caseload personally about this. And do not wait. Get going. And I mean personally. Not an email, not a phone call – in person. OK, if you have to do it on email and phone, do it. I am just saying that doing it in person is my first choice. Secondly, plan some general reminders to every donor on your caseload on this subject. It could be a flyer that goes with their receipt, or it might be a one-page document that outlines the advantages of donating appreciated stock – the point here is to put something in writing that makes the case in an attractive way. Lastly, plan for a reminder “touch” on this subject to each of your caseload donors between Christmas Day and New Year’s Day. That’s right. I’m talking about the last week of the calendar year.
Jeff and I are constantly amazed at the amount of wealth out there. It is unbelievable. And much of that wealth is in appreciated stock. In many cases, the owner of that stock does not realize that she has in her hands a wonderful gift for your organization. It is up to you to tell her about this gift, and to help her give it where it will matter most.