It’s important to educate your staff and board members on the various methods donors can use to contribute, as this knowledge can significantly enhance the success of your capital campaign. 

Discover five alternative ways donors can support your organization beyond simply writing a check.

It’s important to educate your staff and board members on the various methods donors can use to contribute, as this knowledge can significantly enhance the success of your capital campaign.

Capital campaigns may be pivotal for nonprofit organizations looking to raise significant funds needed to support long-term goals and secure their future. Educating staff and board members on the various ways donors can contribute is essential for maximizing the impact of these campaigns. Additionally, having a well-defined Gift Acceptance Policy that can guide your nonprofit through evaluating and accepting different types of donations is crucial to ensure that contributions align with your organization’s values and operational needs. 

1. Stock Donations: Maximizing Impact Through Appreciated Securities

Stock donations, or gifts of securities, allow donors to contribute by transferring ownership of stocks, bonds, or mutual funds directly to your nonprofit. This method is beneficial as it lets donors make larger contributions than they might with cash while offering significant tax advantages.

Why They Are Important:

Stock donations enable donors to give more by leveraging the appreciation of their investments. As stocks grow in value, the donation amount increases, and donors can avoid capital gains tax, making this an attractive giving option.

• Increased Contributions: As stocks appreciate over time, donors can contribute more than they might through cash donations.
• Tax Benefits: Donors may avoid the capital gains tax (up to 37%) and receive a charitable deduction.

An Example:

A donor initially invested $5,000 in stock, which has appreciated to $25,000. If they sell the stock and donate the cash, they would owe $4,000 in capital gains tax, leaving $21,000 for the donation and a tax deduction of $7,700. However, if the donor chooses to donate the stock directly, they entirely avoid the capital gains tax. This means the full $25,000 goes to your nonprofit, and the donor receives a larger tax deduction of $9,250. By donating the stock directly, the donor increases both their tax benefit and the amount your nonprofit receives.

Maximize your donation amount by accepting stock donations directly

These tables show the financial benefits of donating appreciated stock directly vs selling first.

2. IRA Contributions: A Tax-Efficient Giving Strategy

For donors aged 70½ or older, IRA contributions present an excellent opportunity to make tax-advantaged gifts. These Qualified Charitable Distributions (QCDs) allow donors to contribute up to $100,000 per year directly from their IRAs to a qualified charity, free from taxes.

Why They Matter:

IRA contributions are reliable, allowing donors to reduce their taxable income while supporting your mission. This strategy is especially beneficial for those required to take minimum distributions from their retirement accounts.

• Tax Efficiency: Donating retirement assets can be a highly tax-efficient estate planning strategy, benefiting both the donor and the nonprofit.
• Potential for Ongoing Support: Since IRA distributions are annual, they offer donors the opportunity to regularly include your organization in their giving plans, providing a potential source of dependable funding when donors choose to make charitable contributions part of their distribution strategy.

Key Considerations About Eligibility:

• The donation should be made to a qualifying charity, as private foundations and donor-advised funds do not qualify for QCDs.

3. Donor-Advised Funds (DAFs): Simplifying Charitable Giving

Donor-advised funds (DAFs) have become an increasingly popular method for donors to support their favorite causes. Donors can streamline their charitable giving by recommending grants from their DAFs while benefiting from tax advantages.

Benefits:

DAFs offer flexibility for donors to support multiple organizations and enjoy tax-free growth of the funds. This method simplifies the giving process and provides an attractive option for ongoing philanthropic support.

• Flexibility: Donors can support multiple organizations through a single fund.
• Tax Efficiency: Contributions to DAFs are tax-deductible, and the funds can grow tax-free.

4. Planned Giving: A Legacy of Support

Planned gifts offer a predictable income stream, providing financial stability for your nonprofit. Encouraging planned giving can also deepen donor relationships and foster long-term support.

Benefits to Nonprofits:

Planned gifts offer a predictable income stream, helping to ensure financial stability for your nonprofit. Encouraging planned giving can also deepen donor relationships and foster long-term support.

• Future Funding Security: Planned gifts provide a predictable stream of income.
• Donor Loyalty: Encouraging planned giving can deepen donor relationships and increase long-term support.

Benefits to Donors:

Donors can make a significant impact, often larger than what they might have been able to give during their lifetime. Planned giving also provides tax advantages and allows donors to leave a lasting legacy.

• Tax Advantages: Donors may reduce their income and capital gains taxes.
• Legacy: Donors can make a larger gift than they might have been able to during their lifetime.

5. Matching Gift Programs: Doubling the Impact

Encouraging donors to leverage their employer's matching gift programs can significantly amplify the impact of their contributions. These programs can substantially boost your capital campaign by doubling or even tripling the original donation.

Why They Matter:

Matching gifts is a straightforward way to maximize donations without extra cost to the donor. These programs can significantly boost your fundraising efforts and provide additional engagement opportunities with donors and employers.

• Increased Funding: Matching gifts provide a straightforward way to maximize donations without additional cost to the donor.
• Donor Engagement: These programs offer another avenue to engage donors and their employers in your mission.

Empowering Donors with Strategic Giving to Build a Sustainable Future for Your Nonprofit

By understanding and utilizing these diverse strategies—including stock donations, IRA contributions, DAFs, planned giving, and matching gift programs—your nonprofit can empower donors to contribute in ways that align with their financial goals and philanthropic passions. These strategies ultimately build a sustainable funding model that supports your organization's mission for years to come.

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Are you ready to embark on your capital campaign journey?

Managing capital campaign contributions effectively during the campaign period is crucial to ensuring the funds are utilized wisely and grow over time. Consulting with an eCIO Investment Advisor can help by developing a plan to strategically invest incoming donations to maximize returns, manage liquidity for ongoing project needs, accept appreciated securities from donors, and provide financial oversight to ensure that campaign goals are met efficiently and sustainably.

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Don't Miss the Rest of the Series, "Mastering Capital Campaigns":

• Mastering Capital Campaigns: Your Step-by-Step Guide to Success
  A comprehensive overview of the key steps for running a successful capital campaign
• Mastering Capital Campaigns: Effective Giving Strategies
  Explore three essential tools that will streamline your campaign efforts
• Mastering Capital Campaigns: Tools and Resources
  Learn about five alternative methods donors can use to support your organization beyond just writing a check.

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Disclosure: The information provided in this article is for informational purposes only and is not intended to be, and should not be construed as, legal or tax advice. The examples provided are hypothetical and intended to illustrate potential outcomes based on an assumed capital gains tax rate of 20% and an income tax rate of 37%. Actual tax rates may vary based on individual circumstances and changes in tax law. Investors should consult with their own tax, legal, and financial advisors before making any investment decisions or implementing any tax strategies. The SEC, FINRA, and other regulatory bodies do not endorse or approve any specific tax strategy or investment product. 

Past performance is not indicative of future results. Investments are subject to market risks, including the loss of principal.