How to accept stock donations: Easy steps for nonprofits
Maybe a donor has suggested giving a gift of stock, or you’ve found the perfect solicitation opportunity and want to move fast. Perhaps you’ve just heard that stock fundraising is a savvy strategic choice for nonprofits today (with over $40.7 billion in stocks donated between 2018 and 2021).
No matter your reasons, you’ve decided your nonprofit needs to begin accepting stock donations.
What next steps should you take? How do you begin promoting this form of giving to donors? What are the logistics involved in accepting stock donations?
Stock gifts bring unique benefits and outsized impacts, so getting your fundraising process right can pay dividends quickly.
After all, stock gifts are typically much larger than cash gifts (the average stock gift is worth $5,000!), and research shows that organizations that focus on non-cash gifts grow six times faster. The tax benefits of stock gifts for donors can also make them easy pitches that are sure to catch attention.
To start fueling growth with gifts of stock, you’ll need the lay of the land. This guide will cover everything you need to know, including the traditional and modern stock fundraising processes, important context to share with your organization, and how to make stock gifts a sustained priority.
What you need to accept stock donations
First, what tools and resources will you need to launch your stock fundraising program?
What your nonprofit needs
To kick off a stock fundraising program, you’ll need a few essentials. You likely already have access to all or most of these resources:
- A stock brokerage account to receive and manage your donated stocks, or a stock giving tool that can liquidate gifts for you
- A stock giving tool to help streamline the donation process (learn more below)
- The team capacity to oversee the program, typically just an hour or two a week as you get started
- A CRM or database to record gift details and manage donor relationships
- Marketing collateral to begin promoting your program and educating donors about the stock donation process
What your stock donors need
For your donors to authorize gifts of stock, they’ll need:
- Charitable gift transfer or letter of authorization forms from their stock brokers, which are typically available online
- Your nonprofit’s brokerage information, including:some text
- Your brokerage’s name
- Your organization’s account number
- Your organization’s DTC (Depository Trust Company) ID and clearing numbers
Note: Many organizations now turn away from the traditional process of accepting stock gifts, which involves passively sharing your information to enable the transaction. Why? Because it leaves the steps of gathering this information up to the donors. Everyone expects a more frictionless experience today, and no one wants to chase another form around.
Improve the experience, and you’ll secure more gifts!
The traditional way to accept stock gifts
Traditionally, nonprofits receive gifts of stock through a simple but passive process that can be summed up as Publish, Promote, and Wait:
- Publish your nonprofit’s identifying brokerage and DTC information on your website for donors to use on forms to initiate transactions.
- Promote stock giving and its benefits to your donors, directing them to your published information if interested in making a gift.
- Wait to receive stock gifts through your brokerage account.
The drawbacks of this method of accepting stock donations
These three core steps remain the foundation of all stock donation processes, but approaching them passively brings several major drawbacks.
First, a hands-off stock fundraising method in which you publish information and ask interested donors to navigate forms on their own creates a poor donor experience.
Openly publishing this information without some kind of wall or lead capture page in place can also create a security risk, as financial information scraped online can fuel fraud.
More importantly for the long-term sustainability of your stock fundraising, however, stock gifts received this way are usually reported anonymously. Anonymous gifts mean that you can’t thank stock donors or actively build relationships with them, greatly complicating follow-up and stewardship.
Plus, if your nonprofit prefers to immediately liquidate stock gifts (recommended to ensure maximum value), their impact will be delayed and their accounting will be complex. You’ll need to direct your broker to liquidate received gifts, potentially pay fees, and then wait for the net cash proceeds to transfer.
The modern way to accept stock gifts: 4 steps
Considering the drawbacks of the traditional stock fundraising process, how can you build upon its core steps to create a more intentional, positive, and secure experience?
We recommend this easy approach:
1. Use a stock giving tool to help facilitate the process.
Use a tool designed specifically for stock donation to streamline the process and improve the donor experience.
Platforms like FreeWill make it easy to address all the concerns discussed above. You can create a lead-capture page for stock donors, steward your relationships with ease, and automate form and receipt delivery.
We can even immediately liquidate received stock gifts for you, ensuring your nonprofit can put them to work for your mission as quickly as possible without waiting on a middleman brokerage.
Learn more about our stock giving tool and how it streamlines both the donor experience and your job.
Note that while dedicated stock giving tools aren’t required to improve your stock fundraising process, they help immensely on multiple fronts—donor experience, data collection, logistics, and more. If you don’t invest in an improved stock giving tool, you can still follow these steps to create a more intentional fundraising process.
2. Publish an information-capture page to gate the information and automate the giving process.
Publish a new data capture page on your website where donors can indicate their interest in giving stock before receiving your information and/or initiating a transfer. Use it to reinforce your asks and explain why donors should choose to donate stock, the potential tax benefits, and how these gifts fuel your mission.Gating the stock donation process this way accomplishes two goals:
- It adds a level of protection to your nonprofit’s identifying financial information.
- It ensures that you’ll know who gave which stock gifts and when, allowing you to thank and steward them and bypass the anonymity problem of the traditional process.
(Depending on which stock giving tool you use, this step may look slightly different. Follow your provider’s guidance to ensure your form is configured correctly. You may also not use a stock giving tool at all—the key is simply to add a gated page into the process.)
If you’re building this page yourself, a simple form that collects your donor’s name and contact info, brokerage information, type and name of stock, intended donation date, and the value/number of shares to be donated will suffice.
Note: Donors can only receive a charitable tax deduction for the fair market value of their donated shares if they’ve owned them for over a year. If they were held for less than a year, the deduction is instead limited to the cost-basis, or what they paid for the stock. If a donor is giving private stock, they must have the shares appraised by a broker or financial institution to determine the fair market value.
3. Direct donors to your stock giving page.
As you promote your stock giving option in marketing and conversations, direct donors and prospects straight to your new stock giving page. Here, they’ll input their information and begin the transaction process.
4. Automatically send donors the transfer instructions for their brokerage.
Donors visit your stock giving page and complete your form. At this point, your stock giving tool should provide donors with (or send them directly to) their broker’s appropriate transfer authorization form for a charitable gift of stock. Donors will input your organization’s provided information, confirm details of the gift, and submit the transaction.
If you’re not using a dedicated stock giving tool, you should instead direct users who’ve completed your form to an instruction page that provides next steps (submit your broker’s appropriate transfer form, etc.) and your DTC information. You may also automate emails that provide these instructions upon completion of your form.
You should then be notified of the gift and its details for record-keeping and stewardship purposes.
Once processed, your received shares can be immediately liquidated via your stock giving tool or routed to your brokerage if you prefer to hold them. Finally, send donors receipts for their gifts and messages of thanks!
Benefits of this approach to stock fundraising
To recap, the modern approach to accepting stock gifts brings these benefits:
- It provides a smoother donor experience and creates a more intentional user journey by automatically equipping donors with the information and forms they need (versus asking them to chase it all down themselves).
- It reduces risk by gating your organization’s financial information.
- It eliminates donor anonymity and enables active stewardship by asking for donor information upfront and notifying you of new gifts.
Taken together, these benefits mean more successful fundraising and greater long-term impact.
It’s much easier to make stock fundraising (and all non-cash fundraising) a sustained priority when it’s simple for your team and generates the data you need to steward and grow your relationships with donors.
Example process: Stock giving in action
Here’s an example of a modern, safe stock giving process from Reasons to Believe. Take a look at the donor journey they created using FreeWill.
First, donors encounter a discussion of the benefits of stock giving and a call to action on the organization’s Ways to Give page:
From here, users are directed to the organization’s custom stock giving page, hosted by FreeWill and full of all the information prospective donors will need to make their decision:
When ready to make a gift, users are presented with three options. The first and most prominent option is initiating a stock gift online, which will prompt the donor to complete a form.
The next option is to go straight to the organization’s transfer information. This information is still important to share, but by not leading with it, the organization reduces the chances that a new donor will unknowingly give anonymously. The third option is for financial advisors to initiate a gift on behalf of a client.
To give stock online, users are then guided through a quick form that collects key information about them and their gift:
Once users submit this form, they’ll receive custom instructions for initiating a gift with their broker and the organization’s DTC information. The organization receives all the data it needs to steward and account for the gift, and the entire process runs more smoothly on both sides.
Helpful context on stock fundraising
Whether you’re seeking to accept stocks for the first time or revamp your existing approach, you’ll need to make the case to your organization that it warrants attention.
Here’s what you (and your nonprofit’s leaders) need to know:
What types of stocks can be donated to nonprofits?
There are three types of stock that can be donated to nonprofits:
- Publicly-traded stocks: These are the most frequently donated non-cash assets because they’re widely owned and have publicly known prices.
- Privately-held stocks: These often have significantly higher values but require independent appraisals to determine their fair market dollar values.
- Mutual funds: These risk-mitigating bundled stocks are a popular option among everyday traders and investors.
What are the benefits of accepting stock for nonprofits?
First and foremost, the benefits and tax savings of donating stock frequently encourage donors to give what would be considered major gifts, perhaps for the first time. Gifts of stock are usually quite larger than cash gifts, and they represent a huge pool of potential donation revenue—the US Census estimates that 97-99% of wealth is held in non-cash assets.
Plus, donors are often more willing to give out of their wealth (i.e., from unearned gains on investments) than out of pocket (i.e., their disposable income). Encouraging gifts of stock can unlock generosity from donors who might otherwise feel hesitant to give a major gift.
Taken together, these benefits are powerful. Nonprofits that actively encourage and accept non-cash assets display revenue growth 66% higher than those that only accept gifts of cash.
What are the benefits of donating stock for donors?
There are a few key benefits that donors experience when donating stock to a nonprofit.
First, donating stock allows donors to avoid both capital gains and state income taxes that they would otherwise need to pay if they instead sold the stock to donate cash. Additionally, donors can claim a charitable deduction for the current fair market value of their stock at the time of donation. Together, these benefits can represent significant tax savings for donors.
Donating stock also exempts donors from the wash-sale rule, essentially allowing them to repurchase the stock for its current fair market value, reset their shares at a higher cost-basis, and maintain the composition of their portfolios.
Learn more about the tax benefits of stock donations with these guides (which you can share with your prospects):
- Donating stock to charity: A step-by-step guide for donors
- How to deduct appreciated stock donations from taxes
- 7 ways to avoid capital gains tax on stocks for any investor
How to launch and sustain a stock giving program
Let’s say you’ve decided to make stock fundraising a key priority for your nonprofit—excellent! To build the modern stock process into a sustained fundraising program, you should follow these steps:
- Determine who will oversee the stock giving program. Most organizations designate someone on their accounting or finance team to finalize the receipt of gifts from the broker or stock giving tool and then notify the development team to follow up with the donor. However, nonprofits of all sizes and bandwidths can delegate responsibility in any way that makes the most sense—the key is simply to assign clear ownership.
- Establish stock acceptance and investment policies. If needed, create policies that specifically lay out the process and guidelines by which stocks will be accepted as donations and liquidated. This example policy covers all of the essentials, including timeframes for liquidation, regular account audits, and the status of stock proceeds as restricted or unrestricted. Note that it is standard practice for nonprofits to implement a same-day liquidation policy for stocks received as donations in order to minimize the risk of loss of value. With a stock giving tool like FreeWill, you can set liquidation as a default action.
- Open a brokerage account if needed. In order to receive transfers of stock, you’ll need to open a brokerage account or work with a fundraising tool that serves as a brokerage. Nonprofits usually receive discounted brokerage fees from providers like Schwab and Fidelity Charitable.
- Set up your stock giving tool. As explained above, dedicated tools designed to improve the donor experience and gather the information your nonprofit needs will help you raise more. For the best results, use a platform like FreeWill to simplify and automate the stock fundraising process.
- Create a stock giving page on your website. See Step 2 of the modern stock fundraising process above. This page should explain the benefits of stock gifts, collect essential donor and gift information, and then provide donors with the forms and information they need to initiate a charitable transfer.
- Ensure donors will receive tax receipts. Depending on your stock giving tool, this process may look different for each organization. Confirm that donors will receive receipts that include all the necessary information to claim tax deductions in a timely manner. Don’t skip this step—receipts are required for gifts valued over $250, and tax deductions are a primary motivator for stock gifts in the first place.
- Educate your team about stock giving. Ensure your fundraisers can confidently speak about the benefits of donating stock and how your donation process works. Double-check that all involved teams (including those in finance/accounting) understand their responsibilities when gifts are received.
- Promote your stock giving program. Let donors know about your new giving option! Promote your stock giving page through emails, social media posts, and newsletter highlights. Target segments of your donor base (typically wealthier donors or those who work for major corporations) with more tailored communications asking them to consider a stock gift and to reach out with any questions. See FreeWill’s Stock Giving Report for a closer look at common stock donor demographics.
- Incorporate stock giving into your development conversations. Your fundraisers should now be well-equipped to make stock fundraising a sustained priority. Stay on the lookout for new fundraising opportunities as you learn more about your donors and prospects. Offer stock giving as one of several options—ideally including other non-cash giving methods like DAF grants and QCDs.
- Track and steward all stock donors. All stock donation information should flow to your CRM or database for storage and analysis. Remember that stock donations have the potential to become recurring and quite valuable gifts, so stewardship is crucial. Continue sending stewardship communications to keep these donors engaged and encourage them to make another gift of stock—especially before the end of the year for tax filing purposes!
How FreeWill’s stock giving tool can help
It’s simple—build a more intentional process, and raise more money through stock gifts.
FreeWill makes accepting stock donations easy and safe for both your nonprofit and your donors. We give you the online tools you need to promote and accept gifts of stock, smoothly walk your donors through the process, and actively manage your growing revenue stream.
Learn more about our Stock Giving tool and reach out with any questions. We can’t wait to help you unlock transformative gifts to drive your mission forward.
If you want to learn more about non-cash giving, keep exploring with these resources from the FreeWill team:
- Planned giving: A complete guide to legacy giving programs
- Qualified Charitable Distributions: What nonprofits need to know
- How to accept crypto donations: Complete nonprofit guide
- DAFs 101: Introduction and how-to guide for nonprofits
