Demystifying Asset Giving For Nonprofits
Karen Houghton, CEO of Infinite Giving, shed light on the untapped potential of asset giving for nonprofits. With 90% of wealth in the United States being held in assets other than cash, nonprofits often miss out on significant donations from high-capacity donors. Continue reading for takeaways from this live session.
Expanding Beyond Cash:
Traditionally, nonprofits primarily focus on soliciting cash donations, but by accepting different types of assets, such as cryptocurrency and stock donations, nonprofits can tap into tax-efficient and potentially larger gifts. This approach enables organizations to work smarter, not harder, by leveraging the resources already available within their donor pool.
The Power of Stock Gifts:
One strategy discussed during the webinar was the acceptance of stock gifts. Research has shown that combining requests for stock gifts alongside cash donations can increase overall contributions by an impressive 55%. Educating donors about the benefits of donating stocks and making the process easy for them can encourage larger capacity gifts. Nonprofits can open brokerage accounts to receive stock gifts, and partnering with organizations like Infinite Giving or Donate Stock can streamline the process, eliminating transaction fees.
Endowments for Sustainability:
High-capacity donors often prefer contributing to endowments, which provide long-term support to nonprofits. However, establishing an endowment requires careful planning, including creating an investment policy statement and proper governance documents. Nonprofits must ensure they have healthy reserves and think long term before embarking on this path. Collaborating with partners experienced in nonprofit expertise can help navigate this complex process while having meaningful conversations with donors regarding their preferences.
The Rise of Donor-Advised Funds:
Donor-advised funds (DAFs) have gained popularity in recent years, offering a unique way for donors to contribute while receiving tax benefits. However, nonprofits need to actively seek grants from these accounts, as DAFs are often held by third-party entities with limited incentive to disperse funds quickly. By fostering relationships with donors utilizing DAFs and raising awareness about the availability of this giving option, nonprofits can unlock additional avenues for financial support.
Choosing the Right Approach:
Karen Houghton highlighted two options for managing asset donations effectively. Nonprofits can either opt for a platform like Infinite Giving, which combines brokerage and cryptocurrency accounts, or seek out individual players in the ecosystem, such as The Giving Block. While both options may involve monthly and transaction fees, it is crucial for nonprofits to consider their budget and choose the solution that best aligns with their goals and resources. The overarching aim is to democratize access to donation management tools and make the process easy and accessible, particularly for smaller organizations with limited resources.
Karen's insightful presentation emphasized the importance of diversifying fundraising opportunities for nonprofits. By embracing assets beyond cash, such as stock gifts and cryptocurrency, organizations can unlock significant donations from high-capacity donors. Additionally, building sustainable endowments and establishing relationships with donors utilizing donor-advised funds contribute to the long-term viability of nonprofits. By actively incorporating asset giving into their fundraising strategies, nonprofits can maximize their revenue potential and create a brighter future for their causes.
