Written by Jim Bush, Principal and President KPIs
Donors are actively giving large and transformational gifts despite the pandemic. We’ve seen ample evidence of generosity across the country and across nonprofit sectors. There are two primary factors motivating today’s record gifts. Understanding these motivators is key to securing the transformational gifts that are on the horizon in 2021.
DONORS HAVE SHIFTED AWAY FROM COVID RELIEF
The first motivator is the virus itself. Like the rest of us, donors have pandemic fatigue. They are weakened and saddened about the virus’ impacts and are ready to look forward. While their initial giving revolved around relief, their focus has shifted to long-term sustainability. Donors are stretching their giving to organizations with vision and a plan to achieve it. It is why we’ve noticed an increased interest in funding endowments and in programs that look well past the pandemic.
But there’s something else that’s behind the large numbers of major gifts being given now to nonprofits and educational institutions. Something creating a sense of urgency.
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Now is the perfect time to launch a campaign.
Donors are actively giving large and transformational gifts despite the pandemic.
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BEYOND ALTRUISM: WHY DONORS GIVE
We recently spoke with Christine Scruggs, a member of Wellspring Financial Solutions, a wealth advisory team who works with high-net-worth families in Nashville. When asked what she believes is motivating donors to give right now, she pointed to the stock market and its record gains.
Scruggs and her team remain optimistic about investing and the economy despite uncertainty that may come with a new presidential administration. A recent article in The Chronicle of Philanthropy echoes her sentiments. “Stocks have rallied in response to good news on vaccine development and a close partisan margin in Congress that may stave off major tax-law changes.” [1]
Most high-net-worth Americans have stock portfolios overflowing with highly appreciated stock shares. Selling this stock will result in significant capital gains taxes; donating the stock to charity, on the other hand, may create a tax advantage. Navigating the opportunities charitable giving offers high-net-worth families should be part of a holistic wealth management plan and executed with guidance from experienced professionals.
“Tax considerations tend to significantly influence charitable decisions for high-net-worth individuals and families,” notes Scruggs. A new stimulus package expected to pass this year will likely provide even more financial incentives to promote philanthropy, particularly among high-net-worth families. The 2020 CARES Act, for taxpayers who itemize, increased the charitable cash contribution from 60 percent of Adjustable Gross Income (AGI) limit to 100 percent. Among wealthy donors, stimulus legislation has the potential to continue to encourage substantial giving levels.
For nonprofit organizations, now is the perfect time to raise major gifts—or restart the campaign you paused during the pandemic. The longer you wait, the harder it will be to restart your campaign.
USE THESE MOTIVATORS TO SECURE MAJOR GIFTS
Nonprofits should actively encourage donors to gift appreciated shares by reminding them of the tax advantages they’ll realize: reduced capital gains as well as greater tax deductions. Illustrate the impact they can make by showing donors personal and emotional examples of how their greater investment will advance your mission.
Scruggs also encourages nonprofits to capitalize on donors’ desire to leave a legacy. She points out that many of her clients, particularly Baby Boomers, “want to continue to change the world even when they aren’t here.” She cites a 2018 U.S. Trust study that notes six in ten high-net-worth donors give to set an example for future generations.[2] The more we can have discussions with major donors around legacy opportunities and the chance to share the joy of giving with their children and grandchildren, the more philanthropy we will stimulate.
Most importantly, we need to continue to fight the urge to let external factors settle down before we actively fundraise. Staying silent and not communicating with our donors is the worst thing we, as fundraisers, could do right now.
At their heart, donors are investors who want to solve problems for organizations they care deeply about. They want to be your partner as you educate the next generation, heal the sick, or feed the hungry. The same U.S. Trust study found that 87 percent of donors give because they are asked.[3] So involve them in your plans for the future, listen to their input, and then invite them to invest.
