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Are you aware that only 7% of a person's wealth is held in cash? That means the vast majority of their assets, like stocks, real estate, and artwork, are being overlooked by most nonprofits when it comes to fundraising.
In this episode of our podcast, we're diving into the world of non-cash donations with fundraising expert Dawn Galasso from Pursuant. She'll reveal how your nonprofit can tap into this often-ignored revenue stream and unlock the potential of non-cash gifts.
With inflation on the rise, many people are hesitant to part with their cash. But non-cash assets offer an appealing alternative, especially since their value can fluctuate. And with the current economic climate, giving a non-cash gift can be a smart way to avoid unfavorable capital gains taxes.
The key to successful fundraising is meeting donors where they are and accepting the types of gifts they want to give. Is your organization set up to receive non-cash donations? It's becoming easier every day to accept non-traditional gifts, and it's more important than ever if you want to attract younger donors.
Tech Is Making Non-Cash Gifts Easier to Accept
Cash is certainly the easiest way to make a donation. Gifts in stock, real estate, and other non-traditional forms take time — they don’t liquidate immediately. These assets must often be sold first, which can take weeks or months, and their value could change in the meantime. Because of this, nonprofits should be transparent with donors about the transaction details. For instance, cashing out such assets means the value is subject to capital gains tax assessment. So, a stock valued at $100,000 could be taxed at 15%, reducing the gift amount to $85,000. But, if your organization has the means to accept stock, the donor avoids the tax, and you receive the full value.
New technology is emerging to remove the friction of giving non-cash assets. The Giving Block, for example, enables donors to give stock and other non-cash assets seamlessly online, doing all the work a nonprofit would normally need a staff member to complete. This makes it much easier to accept a non-cash donation.
In addition, GivingDNA can help you identify donors in your file who might be quality non-cash donor prospects. For instance,
Each of these data points can be indicative of a donor in your file who could be a good candidate for giving a non-cash gift.
Opportunity to Reach Younger Donors
As Millennials age, they are increasingly investing in stocks, mutual funds, and donor-advised funds. Unsurprisingly, their donations are growing as well — up 40% in 2022 compared to 2016. This combo should motivate fundraisers to build relationships with younger donors by accepting non-cash donations.
We’re also seeing millennials more interested in cryptocurrency, which is another reason to invest in ways to accept non-traditional, non-cash assets. This is the next generation of wealthy major gift donors; accommodating them today can kick off a lasting relationship that will lead them to support your organization for years to come.
Most of the wealth that will be transferred from older to younger generations in the next 25 years will be in non-cash forms. So, if you have young donors on your file, now is the time to educate them on non-cash giving through resources on your website or in an email series. This could prompt a conversation with parents or grandparents around what giving non-cash assets means. For instance, you can present opportunities for aging donors to help nonprofits and mitigate taxes at the same time by making a non-traditional donation.
More Giving Options Boost Donor Loyalty
The takeaway? Don’t be afraid of non-cash assets. The traditional ways of giving will continue to change as young donors explore new forms of holding wealth and as new technology makes it easier to transfer assets. Think of how cryptocurrency is already changing the world — it’s also changing the way donors want to give.
To stay relevant and cultivate new relationships, you must meet donors where they are. Having multiple vehicles that allow donors to give in the form they want to give will help you do just that. This is all about keeping your connection with the donor front and center. By giving them as many options to donate as possible, you’ll build a valuable bond that will drive loyalty to your organization across generations.
Listen to the full episode: