Non-profit organizations are always on the lookout for new and innovative ways to raise funds to support their mission. Accepting donations of appreciated stock is a game-changing strategy that deserves a place in every non-profit’s toolbox.
Fundraising managers may wonder, “Stocks? Isn’t that more of an investor thing?”, and they would be correct. However, accepting donations of stock or securities offers much more than an investment opportunity. It’s a tax-saving strategy that results in a win-win-win for the non-profit, its donors, and the causes it supports.
With the bull market in stocks celebrating its second birthday, many potential donors have likely seen sizable gains in their investment accounts, especially those who have invested heavily in the tech and AI sectors. While that’s great for their personal wealth, it also creates a tricky tax situation when the time comes to sell those investments, and they are often exposed to hefty capital gains taxes.
Enter the beauty of donating appreciated stock. By gifting those shares directly to your non-profit, your donors can:
- Avoid paying capital gains tax on the appreciation of stocks or securities
- Become eligible to claim a charitable deduction, sometimes for the full fair market value of those assets
- Continue to support the causes they care about
Receiving stock donations is a transformative opportunity for non-profits. Unlike individual investors, non-profit organizations don’t have to worry about capital gains taxes when selling donated shares. This strategy allows them to retain the full value of the donation and boosts the impact of the gift on the organization’s mission. Many donors are actively seeking tax-efficient ways to support the causes they believe in. Offering this donation option makes your organization an attractive choice and differentiates it from other charities.
What practical steps can a non-profit take to implement this strategy? By simply opening a brokerage account to accept stock donations, your organization can unlock a powerful new fundraising channel that benefits everyone involved.
The process is surprisingly simple:
- Open a brokerage account specifically for accepting stock donations
- Promote this giving option to your donor base, highlighting its tax benefits
- Provide clear instructions on how donors can initiate the transfer
The donor handles the stock transfer, while the organization receives the full value of the investment asset; both come out ahead. If the donor is being serviced by a financial advisor, this strategy can be implemented as easily as a cash donation. If they do not have a capable advisor, suggest that they reach out to our affiliate wealth management group, Equinum, to receive professional, white glove service.
In a market flush with investor gains, tapping into donated appreciated stock can be a powerful fundraising strategy for non-profits. It allows donors to maximize the impact of their gift, while the non-profit retains its full value to drive its mission forward. Potential donors should consult with their tax advisors to ensure this strategy aligns with their goals and that they are prepared to meet all legal requirements.
Why should your organization wait any longer? Open a brokerage account and start spreading the word. Your donors – and your bottom line – will thank you.
This material has been prepared for informational purposes only and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
