Want To Raise More Money?
Expand Your Options

By Timothy McCormick , Vice President
Great Lakes Region

Most of us have been involved at some time in a conversation that goes something like this: “You know, back in 1990 I could have bought 500 shares of Microsoft at $15 a share. Do you have any idea how much that would be worth today?” 

Well, it would be worth a lot!  While most of your donors probably didn’t get in on a stock deal like this, you might be surprised by how many of them have a wide range of investments. You would be further surprised to learn how few of them are aware of the tax benefits of supporting your organization’s mission by donating appreciated stocks or other investments, instead of cash.

According to a study conducted by Fidelity Investments, 68 percent of donors who had investment portfolios of at least $100,000 were unaware of any tax benefits they could realize by donating stocks instead of cash. When compared to cash donations of equal value, a gift of stock would save a donor an additional 15 percent in taxes, in most cases. According to the same study, among donors who were aware of the tax advantages for donating stock, 23 percent did not use this option because they felt there was too much paperwork involved.
 
With a few well-planned steps, your nonprofit (even if it’s one of the smaller ones) can reap the benefits of year-end stock giving by educating your donor base about this option, and by learning how to make the transfer quick and pain-free.

You do not need be a stockbroker or investment counselor to make this work. The first step would be to recruit some volunteers for your organization who have expertise in these areas. Such individuals might include trust officers at local banks, attorneys, accountants and other financial professionals.

Such volunteers can help your development efforts in a number a ways. Beyond advising you on how to get started, they can write informational articles for your donor newsletter, offer small group educational sessions for your donors, and establish streamlined procedures for your organization to accept, transfer and liquidate stocks and other donated investments.

Another important step is to establish gift acceptance policies prior to pursuing these types of donations. Having guidelines in place ahead of time will make things go more smoothly for both the organization and the donor. Many organizations have in place a standing gift acceptance committee in order to provide a quick response to donor inquiries regarding certain types of gifts.

Beyond appreciated stocks and securities there are other types of donations that may have significant tax benefits when compared to cash. Some examples include life insurance policies, art, land and jewelry.

And don’t forget about a unique opportunity for donors aged 70 ½ to give to their favorite charity out of their IRAs. This current program – detailed in the Pension Protection Act of 2006 – is set to expire December 31, 2007. Though the nonprofit community is encouraging the U.S. congress to extend this program through 2008, a final decision hadn’t been made at the time of our newsletter’s publication. In the meantime, we encourage you to explore this opportunity in the next couple of weeks.

Finally, be mindful of special tax incentives for certain types of donors, such as an incentive for corporations that donate computer equipment used for educational purposes.

With a little bit of work on your part, and the right advisors in place, you will be ready to expand your donors’ giving options beyond the traditional gifts of cash, resulting in more resources to accomplish your mission.