The Pentera Blog

Gifts of Stock Help Nonprofits Dramatically Increase Their Fundraising

It is well known in the planned giving industry that programs which effectively solicit noncash assets - especially stocks - tend to do better than planned giving programs that rely on cash gifts. That's because most wealth is held in noncash assets. Now Texas Tech planned giving researcher Russell James provides documentation that noncash gifts are better for nonprofits in his new study, "Cash Is Not King for Fundraising."

James presented his research results at last week's conference of the American Council on Gift Annuities. He analyzed more than a million tax returns filed by nonprofits from 2010 to 2016, concluding that "nonprofit organizations consistently receiving gifts of stocks or bonds grew their contributions six times faster than did those receiving only cash." The nonprofits receiving stocks had an average five-year growth rate in their fundraising of 66%, while those receiving cash only had an average five-year growth rate in their fundraising of just 11%. Nonprofits receiving any noncash gift - but not specifically securities - increased their fundraising faster than the cash-only nonprofits but slower than those receiving stocks.

Source: Russell James, "Cash Is Not King for Fundraising: Gifts of Noncash Assets Predict Contributions"

James found that the results held true regardless of the size of the nonprofit, ranging from those raising less than $500,000/year to those raising more than $10 million/year.

James also found that too much cash can actually hurt a nonprofit's overall fundraising. Nonprofits that increased the cash percentage of gifts by 10% or more in a given year averaged a 13% reduction in overall contributions for that year. Conversely, nonprofits that had a 10% or more increase in the percentage of gifts that were stocks saw an 18% overall increase in fundraising for the year. Increasing the percentage of gifts that were real estate improved overall fundraising even more - by 26% for the year.

"Organizations raising noncash gifts experience dramatically greater growth in total contributions," James said. "It is important to understand that wealth is not held in cash. When fundraisers ask for cash, they are asking from the 'small bucket.' Donors who have never made a gift from assets may simply never have considered giving from wealth rather than giving from spare income."

You can read an abstract of the research and download the entire study here.