You receive a call from a donor that asks if you accept stock donations.
Do you have an answer? Should you have an answer?
Stock donations are one of the most important assets your nonprofit should have a detailed strategy around.
Let’s dive into why stock donations are important, complicated, and in need of an update in our sector and your organization. But before we do, we’re excited to announce our new certified integration with Overflow.
Overflow specializes in making the stock donation process as easy as possible for your donors and your organization. Available now is the industry’s deepest and most comprehensive stock to CRM donation integration for growing nonprofits.
Can you donate stocks?
Yes! Yes, you can. Many nonprofits accept stock, bonds, and mutual fund donations or non-cash securities as gifts or donations.
Donating stock is not as complicated as it may sound, same for accepting stock donations as a nonprofit. Although, that hasn’t always been the case.
Note: when we talk about stocks, we’ll be using that as shorthand for non-cash securities like stocks, bonds, and mutual funds. Just to keep things simple!
Why should you accept stock donations?
The number of donors giving appreciated assets is rising very quickly. Over 50% of all charitable donations came from non-cash assets between 2017-2020.
Over 1 million nonprofit tax returns from 2010 to 2017 that included e-filings of over 200,000 nonprofits were studies by Dr. Russell James J.D., Ph.D., CFP®, professor in the Department of Personal Financial Planning at Texas Tech University.
What did he find in this research?
- Nonprofits who received only cash gifts = achieved 11% growth, barely keeping up with inflation rates.
- Nonprofit organizations who received any kind of non-cash gift = achieved 50% growth. This includes gifts of personal and real property and deferred gifts.
- Nonprofits who received securities non-cash gifts = achieved 66% growth. A significant difference when adopting a multi-asset strategy!
That’s a 55% difference between just accepting cash and credit card gifts and stocks.
And with 71.5% of all donor dollars coming from individuals giving $5,000 or more, this is an asset that your organization cannot ignore.
How do stock donations usually work?
To give and accept stock donations, all parties must work through a brokerage account.
A brokerage account, sometimes known as a securities account, is an account that holds financial assets such as securities on behalf of an investor with a bank, broker, or custodian. Investors and traders typically have a securities account with the broker or bank they use to buy and sell securities.
When a donor wants to give, there is a multi-step process that occurs:
- Donor contacts nonprofit to indicate their interest in publicly donating traded stock (1 – 2 days)
- Nonprofit gives its brokerage account information if available (1 – 2 days)
- Donor finds charitable stock transfer form from their own brokerage account and completes it (1 – ? days)
- Donor sends in charitable stock transfer form via mail or fax to their brokerage firm to initiate a transfer (1 – ? days)
- Nonprofit receives stock gifts in its brokerage account, anonymously in many cases, and needs to identify the owner (1 – 30 days)
- The donor receives a tax-deductible receipt for their records if the nonprofit was able to match their gift to the donor (1 – ? days)
As you can see, this is quite the process.
Why do we need to rethink this process?
According to research from Dr. Adrian Sargeant, 18% of donors cite poor service or communication as the primary reason they stop giving to a nonprofit they have supported in the past.
High net worth donors are getting more comfortable giving online. They want a better experience.
Some critical research around a shift to digital giving includes:
- Blackbaud’s Giving Index saw a 13% increase in YoY online gifts
- GivingTuesday’s 2020 analysis saw a noticeable increase in “large” gifts shifting online
- Visa research shows that check usage has been decreasing by 20% over the past five years
What can we do to address the multi-step and confusing process outlined above?
Overflow streamlined the stock donation process by digitizing it and having it completed by the donor within minutes.
We knew we had to get involved, so we scoped out a deep integration into Neon CRM, carefully designed to make things easy for the nonprofit fundraisers.
One of the biggest pitfalls of many revenue-related integrations is that they do not include vital information for the finance team. Your finance team needs to understand and reconcile the integration, and we made sure to do that in our integration with Overflow.
Here’s how the Overflow + Neon CRM integration works:
- First, a Neon CRM client obtains an Overflow account, which may necessitate establishing their own brokerage account (yep, these aren’t going away).
- The Overflow team obtains some basic information from the Neon CRM user to connect on their behalf.
- A donor uses the Overflow platform to make their stock donation, which they can find on the nonprofit’s donation page.
- The stock donation is automatically processed into Neon CRM and tagged as a Stock/Securities gift and automatically creates particular metadata fields relating to the gift.
- These metadata fields will include the number of shares sold, the stock name and ticker symbol, and the stock close price.
All of the above will happen without any duplicate records being created during this process.
And while Overflow handles the upfront receipt, if Neon CRM users wanted to segment these gifts or create specialized workflows for donor stewardship of stock givers, they can! Neon CRM users will easily set this up within their databases.
As you can tell, we are extraordinarily excited about this integration and feel it’ll be transformative for nonprofits of all sizes.