According to a 2016 study by Fidelity Charitable, 80% of donors own appreciated assets (like stocks, mutual funds, or bonds), but only 19% of this population has donated these assets to charitable organizations.
Stock donations are on the rise (+62% YoY from 2017 to 2018), but clearly have much more room to grow. So, what’s the value of donating stocks? Why do we support this way of giving? Simply put, stock donations help you make a bigger impact with zero additional cost.
How does donating stock work?
It all boils down to protecting capital gains, and more specifically, avoiding capital gains tax.
Let’s say Generous Donor Rachel wants to fund a New Story home to create long-term, generational impact. She could liquidate her appreciated stock, subjecting herself to paying capital gains tax in the process, and then give the remaining sum to New Story. Alternatively, she could donate her appreciated assets directly and contribute their full market value towards funding a home. Since nonprofits get to keep 100% of donated stock value, New Story can direct the entirety of Rachel’s generosity towards maximizing impact. Illustrated below:
Depending on where Rachel lives and what her financial situation is, she could be subjected to up to ~37% in capital gains tax by liquidating her securities.
To look at a real example: Jack Dorsey (CEO of Twitter / Square) recently donated $1 billion of Square stock to fund COVID-19 relief efforts. If he gave this amount in liquidated assets, $370 million less could have gone towards Jack Dorsey’s intended impact. Needless to say, we’re glad he decided to give via stock!
Why don’t more people give via stock?
In the past, donating stock has been more manual and convoluted than giving cash. Many nonprofits haven’t yet built out the mechanisms to accept stock, or haven’t made stock donation instructions easily accessible or clear. This is why we’re excited to partner with Overflow, a platform that enables frictionless stock donations (check them out here!).
At New Story, we’re always looking to channel the power of innovation to help make the world a better place, both in the way we address global homelessness and the positive experiences we create for our generous donors. We’re thrilled to support a widespread push for increased stock donations so more people can maximize their impact. For these reasons, we’re now accepting cryptocurrencies too!
With COVID-19 affecting people worldwide and with our current economic environment, nonprofits are playing a crucial role in supporting communities that have been most adversely affected by this year’s events. If you’re in the position to do so, we hope you’ll consider evaluating the small changes you can make to generate an even greater positive impact for families in need.
In partnership with Overflow.
If you have any questions or feedback, please reach out to Ellen at [email protected]