Several years ago, when Steve Latham wanted to make a donation to his alma mater, a financial advisor recommended donating appreciated stock instead of cash. The concept was a win-win: By donating stock, Latham could realize a tax advantage, enabling him to make a larger donation and increase the benefit to the school. The only problem? The process to complete the transaction took several phone calls, paperwork, and more than a week to complete.
“It was such a pain, I never did it again,” Latham said.
It was this experience that gave Latham the idea to launch DonateStock, modernizing these transactions making it easier for donors to give and non-profits to receive.
“We are here to educate, facilitate and communicate,” he said. “We work with nonprofits to educate donors on the benefits of donating appreciated stock. Then we make it easy for them to take action.”
As DonateStock CEO, Steve Latham notes three main benefits to non-profits in accepting stock donations — and they might be surprising:
1. Tap into a new source of funding
Stock represents an untapped source of funding that has either been inaccessible or under-utilized by nonprofits. And while stock gifting has been limited either by lack of awareness among potential donors or a painstaking process, the prize for nonprofits is enormous.
“If every investor donated $2,500 in appreciated stock, $150 billion would flow to nonprofits each year,” Latham said. “So the opportunity to help nonprofits is very significant.”
Particularly as in-person fundraising events were curtailed as a result of the pandemic, it has been beneficial for non-profits to consider new ways for donors to have an impact. Opening the ability to receive stock donations provides another avenue for donors to be able to support the organizations that are meaningful to them in a contactless way.
For donors, donating stock allows them to avoid capital gains on the appreciated stock being gifted since they are able to deduct the full value of the stock from their taxable income. As a result, pre-tax stock gifts are generally much larger than after-tax cash gifts.
“People donate much more in stock than they would have in cash,” Latham said. “In 2021 our average stock donation was about $5,000.”
2. A better experience for your donors
Another key benefit to non-profits receiving stock donations lies within improving the donor experience, modernizing it for the 21st Century. In the past, the manual process of orchestrating a stock gift resulted in a frustrating experience for the donor. But now that donating stock takes only minutes, it can be a much more enjoyable process — and that can lead to more donations and larger gifts.
Sewanee The University of the South started providing donors the ability to make stock donations through DonateStock in 2021. Since then, stock donation transactions that used to take days or weeks now take only minutes.
“We wanted to be out front and give donors options,” said Allison Cardwell, Sewanee’s Director of Gift Planning. “Especially after the pandemic started, streamlining our processes and making things simple for donors has become even more important.”
For donors, the user experience of donating stock can be as easy as this: A donor selects a non-profit and completes a few fields to execute an online donation. Then, DonateStock packages the information and sends transfer instructions to the donor’s broker, and notifies both the donor and the non-profit. The donor’s broker then transfers stock to the account belonging to a non-profit or, if the non-profit does not have its own brokerage, to DonateStock Charitable — which can convert the stock to cash that the non-profit can accept.
“We made a laborious process fast, safe, and free for donors. It’s a process that works, and one in which everyone benefits,” Latham said.
3. Scale easier: reporting and reconciling made simple
Up to now, the archaic process and lack of transparency in donating stock made it difficult to scale stock gifting programs. Because processing, reconciling, and reporting stock gifts are often done manually, nonprofits struggled with managing the back end of processing stock gifts. That’s why Donate Stock provides dashboard reporting and ongoing communications to make stock gifting easy for resource-starved non-profits. Non-profits are alerted on every new donation and all transactions are viewable in the non-profit’s dashboard.
Cardwell said this ability is crucial, especially at peak times for donations, such as the end of the year. Due to the way brokerages handle stock donations, donor information does not travel with the stock gift, presenting a big challenge in reconciling stock gifts. The ability to easily see who made each stock donation and where it is in the process eliminates needless administrative tasks and guesswork.
Setting up nonprofits for success
“Non-profits don’t have to be experts in stock gifting,” Latham said. “We arm them with all of the assets they need.”
In addition to streamlining the reporting and reconciliation process, DonateStock also provides non-profits with easy-to-use donor education materials, including marketing collateral and copy for donor emails, web pages, and social outreach.
“We want to be a force multiplier for non-profits,” he said. “That means helping non-profits find new sources of funding, making the experience better for donors, and providing non-profits with the tools they need to scale stock donations.”
Keeping expenses down for non-profits is a key part of the mission, he said. That is why DonateStock does not charge nonprofits to claim their nonprofit page on the DonateStock website or when using the tools available there. The platform is free, and transaction fees are between 2-3%, considerably less than what nonprofits typically pay to receive cash donations.
Accepting stock donations is a huge opportunity for funding for your nonprofit and DonateStock was launched to help your organization tap into it. Through stock donations, your nonprofit can raise more from existing donors, attract new supporters, and grow your online brand. Signing up is fast, easy, and free.
