Regardless of your role within a nonprofit organization – as a donor or as a campaign/nonprofit executive – there are four important vehicles you should be aware of to help propel your organization’s development. I have met with nonprofit leaders across the country and each time I bring up these opportunities there are always a few folks in the room who approach me afterwards to thank me for giving them such critical information. It is important to review these creative approaches, especially as year-end giving nears.

Appreciated Securities

Many of us have significantly appreciated securities in our portfolios. They are relatively easy ways to satisfy – and expand – your philanthropic endeavors – especially since it can be less “painful” than writing a check.

Using appreciated securities enables a donor to avoid capital gains taxes. The donor receives a tax deduction based on the average selling price on the date the donor sends the stock to the charity. The nonprofit that receives the appreciated securities should immediately liquidate/sell the stock and receive the cash funds. Nonprofit executives should create a procedure (and possibly a committee if one doesn’t exist) to sell securities it receives.


Donor Advised Funds

The number of donor advised funds has skyrocketed in recent years, along with the dollars being held in DAFs for philanthropically-disposed people.  I often suggest that DAFs equate to a bank account for future charitable giving. People who have already created DAFs are more likely to be charitably inclined and are very likely to use these funds as their primary way to distribute support for nonprofits they hold dear.  We encourage nonprofit agencies to track who is using a DAF to make gifts to their organization as this type of information seldom appears in research about giving activities.

With hundreds of millions of dollars being directed to DAFs annually, we are seeing more than 22% of DAF assets distributed every year, as compared with the 5% required distribution from family foundations.

Employee Matching Gift Programs

Hundreds of major U.S. corporations offer incentives to encourage their personnel to be charitable; companies agree to match gifts by employees to various charities with the incentives ranging from a dollar-to-dollar match to some firms that will donate as much as five times an employee’s gift!  Religious organizations are often excluded and some companies even have “preferred” charities that they highlight for matching opportunities.  Employees usually need to complete a simple form that accompanies their check and the burden then falls on the recipient charity to follow through to apply for the matching funds. Some leading U.S. corporations use these programs creatively to spur giving that they might otherwise not include in their charitable giving programs. Corporate matching gifts promote stronger positive feelings between employees and management as well as provide a means to strengthen employee loyalty.

Proceeds from IRAs from Donors 70.5 Years & Older

Men and women who are at least 70.5 years of age and who receive distributions from Individual Retirement Accounts (IRAs) can designate nonprofits as the recipients of these funds.  The benefit to the donor is avoiding paying income taxes on the distributions if they are made directly to the nonprofit. The donor does not receive a charitable tax deduction, however, but does save significantly on income taxes since the IRA income is taxed as regular income.

These four approaches require strategy and advanced thinking so we encourage nonprofits of all types and sizes to highlight these efforts throughout the calendar year because they provide donors and potential donors with creative ways to give. We also encourage donors to incorporate these “vehicles” into their charitable giving program in order to more easily support the agencies and programs that they hold dear.

(Note: we recognize that everyone has different tax situations so we, at Evans Consulting, urge donors to consult with their own financial advisors for appropriate and relevant advice.)     

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