In 2019, every organization needs to focus on gifts of stock and other non-cash assets across all areas of fundraising. Household wealth is 97-99% assets vs cash. If you’re only asking for a cash gifts, you’re asking too small and putting your organization at risk.

Dr. Russell James recently released research based on his analysis of one million organizational tax returns filed between 2010 and 2015. And he discovered that the more cash you raise as a percentage of your total contributions, the LESS overall money you raise!

  • Nonprofit that received cash-only gifts during this time frame grew 11%.
  • Nonprofits that received any non-cash gifts during the time grew 50%.
  • Nonprofits receiving gifts of appreciated securities during this time grew 66%.

At the same time:

  • When cash as a share of your total contributions grows by 10% or more, total contributions FALL by 13%!
  • When securities as a share of your total contributions grows by 10% or more, your total contributions grow by 18%.
  • When real estate as a share of your total contributions grows by 10%, your total contributions grow by 26%.

According to Dr. James: “Shifting to gifts of non-cash assets drives total fundraising growth in every nonprofit sector, at every fundraising size, in every time period (same year and three or five years later).”

Lesson: growing your cash contributions without commensurately growing your asset contributions will damage your overall fundraising!

Why are asset gifts so important?

Much of our financial behavior is influenced by unconscious biases and heuristics (mental shortcuts).  Dr. James reminds us to look to the psychology of non-cash gifts:

  • Donors separate their income and their assets into separate mental buckets.
  • The cash bucket has more demands on it, including the daily costs of living.
  • An asset gift feels smaller to the donor than the same size cash gift, reducing their mental bias against the risk of financial loss.
  • When donors are reminded of their assets, they are reminded they have more available to give.

Traditionally, solicitation of non-cash gifts fell under the purview of planned giving and/or major gifts. But asset gifts don’t have to be large or deferred. Soliciting asset gifts as part of your direct response fundraising can open up a significant stream of income for your organization.

Some ideas:

  • Make sure your organization can accept gifts of securities. Make it easy for your donors to find stock transfer information. Don’t make them jump through hoops!
  • Promote gifts of securities through direct mail; remind donors they can use stock to make their gifts and make it easy for them to do so.
  • Encourage donors to use their donor advised funds (DAF) to make gifts. DAFs accept complex assets and use of DAFs has skyrocketed in the past few years.
  • Ask donors who give through their donor advised funds to set up recurring monthly or quarterly gifts through their DAF.
  • Market IRA rollover gifts to donors over age 70 1/2.
  • Feature asset gifts in your newsletter, buckslips, and through direct mail and email appeals.

How you market gifts of assets matters too. Use the right words! Just as Dr. James has uncovered the “right words” to use in marketing planned gifts, there are “right words” to use in marketing gifts of assets:

  • Mention the tax benefits (deductions and capital gains tax avoidance).
  • Use “social norms” – employ donor examples.
  • Avoid pictures of donors unless you are specifically targeting donors of that age (pictures only work with the same demographic as the apparent age of the photo’s subject). Non-person photos work too. Use only age-matched donor pictures, non-person pictures, or text only.

Don’t be left behind by focusing your time and attention only on cash gifts. Asset-based gifts are the key to your organization's future growth and financial security.

 

Tracy Malloy-Curtis is a 20-year veteran in legacy giving and major gifts fundraising for advocacy and social justice organizations nationwide. She leads the legacy giving practice at MWD.