Unlocking Gifts of Stock: 5 Essential Prospecting Steps

If you want to make stock giving a recurring part of your development strategies, how do you get started? If you’ve never solicited non-cash gifts like stocks, donor advised funds (DAFs), or crypto before, you likely have a few questions.

Just like with major gifts of cash, you’ll need an organized prospecting-solicitation-stewardship pipeline, but one adapted specifically to the goal of securing gifts of stock. Let’s walk through the fundamental steps of constructing this pipeline:

1. Review your current state.
2. Create stock giving personas.
3. Segment your donors and prospects.
4. Keep the conversations going.
5. Maintain your stock giving pipeline.

We’ll also review two important (and common) pitfalls to keep in mind as you develop your stock giving program.

If stock fundraising is new for your team, remember that it’s an endeavor worth undertaking—the average stock gift now exceeds $5,000, and nonprofits that prioritize non-cash forms of giving have been found to grow six times faster than other organizations! Following the best practices outlined in this guide will help you tap into those benefits quickly and sustainably.

Step 1: Review your current state.

To begin, survey your supporters to identify immediate stock giving prospects. If you’ve loosely promoted stock giving in the past, some donors may have already donated stock. (Nonprofits commonly lose track of stock donors over time—more on this pitfall below.)

Keep these tips in mind:

• Ask outright if donors own stock, have given stock gifts previously, or are interested in learning more about this form of giving. 
• Ask other questions that help point your research in the right direction. You likely wouldn’t ask donors to sort themselves by net worth, but you can ask questions that indicate capacity and propensity. For instance, ask whether they’ve donated to political campaigns or served as a Director or Trustee of another nonprofit.
• Use the responses to identify any immediate prospects. Then, supplement your findings with what you already know or can find out through your typical prospecting resources—giving histories, philanthropic and wealth insights, etc. 

Who should you survey? For nonprofits with established major giving programs, focus on your major donors and existing prospects. Smaller shops can easily survey their entire donor bases to cast a wide net. 

Step 2: Create stock giving personas.

Distill your survey insights and existing prospect data into one or more personas or profiles of ideal stock donors. These outline the key characteristics that best indicate a prospect’s likelihood of donating stock to you.

The specific mix of indicators or criteria nonprofits use for this purpose will vary. However, prospect profiles typically comprise three to five indicators—keep them specific enough to be helpful but not so specific that they’re limiting.

Why is this a valuable step? Profiles anchor and guide your prospecting by giving you a starting point. They make it easier to quickly filter your data and head in the right direction when seeking or researching new prospects.

Stock giving insights to support your prospect research

Stock ownership and high net worth are the most important indicators for identifying prospects, followed by philanthropic indicators like previous donations and service. Then, use demographics to further refine your findings. College-educated Baby Boomers and Millennials are the most likely to own stock now and in the coming years.

Exploring industry reports and resources will be helpful as you develop your personas. For example, the 2023 FreeWill Stock Giving Report offers several recent insights:

• Higher education, human services, and arts, culture, and humanities are the leading sectors in terms of reported stock gifts. Higher education, in particular, sees standout performance ($4.36 billion in stock gifts between 2018 and 2021).
  • What it means: If your organization is in a top-performing sector, and particularly if you have an endowment fund, there’s likely an existing interest in stock giving among your community of donors. If not, you can still use these insights to help prioritize prospects, for instance, those who have given regularly to their alma maters or local cultural institutions.
• In terms of geographic location, a US state’s average wealth appears to be a weaker indicator of a prospect’s likelihood to give stock than the state’s proximity to prominent organizations (like leading universities and Fortune 500 companies).
  • What it means: At the broad state level, there is significant overlap between average wealth and stock giving, but, zooming in, we see clearer connections between stock giving and employment patterns. Expending resources to solicit all your wealthy donors for stock may ultimately be less effective than incorporating employment history into your prospecting calculus.
• No strong correlation between market performance and stock giving rates was observed between 2018 and 2021. During this turbulent economic period, donation patterns followed distinct trends that did not closely align with the larger economy’s ups and downs. 
  • What it means: Many factors influence donors’ decisions to give stock. Stock donations can be a helpful tool for financially savvy donors to fine-tune their investment portfolios while reducing their tax bills. Keep these nuances in motivation in mind when researching prospects. Consider prioritizing those with known interests in financial planning, estate planning, and planned gifts who may be particularly receptive to the benefits of stock giving (more on these below).

Step 3: Segment your donors based on what you’ve learned.

Next, segment your database of donors based on the preliminary personas you’ve developed.

As you sort donors and prospects into these groups (or disqualify them from the process for now), roughly prioritize them according to how well they fit the persona. Ongoing research and qualification will help you refine your personas over time.

With your first prospect lists in hand, start reaching out! One-on-one calls, meetings, and educational email streams that discuss the benefits of stock giving are all good first steps. Scale the time needed for outreach to the potential value of the prospect, just as you would for major gift development.

This is also when you’ll need to make sure your website and educational collateral are ready to help you promote and facilitate stock giving. You’ll need a dedicated web page, clear instructions, and an online tool that allows you to collect information about incoming stock gifts.

Step 4: Keep the conversations going.

As you work your way down your prospect lists, start typical fundraising cadences like you would for major gifts of cash—reaching out frequently, presenting cases for support, and more.

Your pipeline should now be coming to life. Confirm that your data entry and hygiene practices are working well. Data hygiene is critically important for any prospecting, development, or stewardship program. It not only ensures you’re working with truly helpful data but also aids with qualification, allowing you to solicit gifts of stock from the prospects most likely to give.

Sourcing new prospects is another key part of the process. Frequently screen your database for new or previous donors who fit into your stock giving personas. Ask for referrals to incorporate into your pipeline. Board members and existing major donors may be able to connect you with new potential donors who already have a built-in connection to your cause.

Understanding stock giving motivations

In addition to these best practices, highlight the unique benefits of stock giving in your conversations with prospects.

All donors want to support meaningful organizations in their lives, but stock giving motivations also revolve heavily around tax and investment strategies. As such, it pays to understand the potential financial implications of these gifts.

While you should never provide explicit financial or tax advice in your communications, you can broadly discuss why many donors choose to give stock and the benefits they see as a result.

Specifically, giving stock is the easiest way for many donors to avoid capital gains taxes while recouping the value of their investments:

• Donors who itemize their taxes can claim a deduction for the fair market value of donated stocks at the time of donation (for stocks held longer than a year). 
• For stocks sold at a loss, a donation can also trigger an exemption from the wash-sale rule. This allows the donor to then repurchase the stock at a higher cost-basis (potentially reducing future capital gains taxes) while also receiving the initial tax deduction for the gift’s current value.
• Stock donations can also supercharge your donors’ tax-loss harvesting strategies. By selling losing stocks, claiming partial deductions for the loss, purchasing a different winning stock, and then donating the stock to avoid taxes on their capital gains and receive another tax deduction, savvy donors can tap into three tax benefits at once.

By understanding the full range of stock giving motivations—emotional and financial—you can develop a more focused and effective prospecting process over time. Identify relatively small segments to which you can more easily devote personalized attention. Take the time to learn about their personal, philanthropic, and employment histories, financial and career goals, and more to build stronger relationships and a fuller picture of giving motivations.

For example, if you identify a strong prospect who’s nearing retirement and who has mentioned their financial planning goals, you can offer them educational resources about the tax benefits and fine-tuned investment strategies enabled by stock donations.

Step 5: Maintain your stock giving pipeline

Again, ongoing prospect qualification is key to the success of your new stock giving program. Continue verifying information on an ongoing basis as you learn more about donors’ interest levels in stock giving, its relevance to them, their connections to your cause, and more.

And as patterns emerge over time, stay agile by using them to improve your program. Adjust your personas or develop new ones. Tweak your case for support and other program materials as needed.

Clear program ownership is also essential for long-term success. Who is in charge of your stock giving program and tracking its performance? Who will own the individual donor relationships? If you’re not using the right tools and following clearly defined processes, stock gifts can easily go unnoticed or unreported to the right people.

Two Common Stock Giving Pitfalls to Avoid

If your nonprofit has never before solicited and accepted stock gifts, you should be aware of two key pitfalls that can inadvertently hamper your efforts over time.

Pitfall 1: Ineffective facilitation of stock gifts

Nonprofits traditionally accept stock gifts by publishing their DTC (Depository Trust Company) information and clearing numbers. Interested donors provide this information to their stock brokers to initiate the donation process. The nonprofit then waits to receive the donated stocks (assuming the donor notified them of the gift).

This approach has one major shortcoming: Gifts received this way are often anonymously reported.

Providing your DTC info without a wall or lead capture in place means you’ll lose the ability to identify and actively steward those donors. If a donor doesn’t tell you they’re donating stock (or tells the wrong person in your organization), you may have no way to follow up with them.

Without the structure and data collection process it needs, stock gifts can very easily get lost in the shuffle. Donors won’t be thanked, and you’ll miss opportunities to strengthen your relationships with them.

Remember that stock donors can easily become recurring donors, and giving non-cash assets often makes them give more generously. Building stronger connections with individuals eager to give in different ways should be a top priority!

The solution: Be more intentional than simply posting your DTC information on your website. Create a standardized process in which stock donors first provide you with basic information about themselves and the gift before being directed to the necessary routing information. The right tools make it easy to collect this information and begin actively tracking and stewarding stock donations, just like other gifts. 

Pitfall 2: Neglecting DAFs as sources of stock gifts

In the report cited above, we found that stocks contributed to DAF accounts greatly surpassed stock donations made directly to nonprofits—by $11 billion in 2021.

Since then, we expect that this difference has grown as DAFs continue skyrocketing in popularity as a preferred giving method for wealthy donors. NPTrust’s most recent DAF Report found that:

Grants from DAFs increased 9 percent to $52.16 billion, a new high for grant dollars. Grantmaking has increased every year since 2009 and has more than doubled in the past five years.

DAFs are quickly becoming a (if not the) primary destination for stocks and other assets that previously would have been directly donated to nonprofits.

If you invest time and resources in developing your stock fundraising capabilities, we recommend doing the same for DAFs, if your organization hasn’t yet.

Many donors might prefer the very streamlined DAF giving experience over the stock giving process, even if you’ve taken steps to make it as simple as possible.

Covering your bases with both stocks and DAFs may bring immense payoff. For example, by learning to identify DAF prospects, you’ll uncover prospects you might otherwise miss by focusing on narrower giving vehicles instead of these broader pooled funds. Honing your DAF fundraising skills can also strengthen your relationships with local community foundations. 

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Don’t be afraid to innovate your nonprofit’s strategies! Modern or unfamiliar forms of giving can unlock significant growth for organizations of all sizes.

Covering these essential prospecting steps and staying aware of the pitfalls described above will help you build a robust stock giving pipeline that fuels growth and deepens your connections with donors. Prepare with the right tools and know-how, take an iterative approach to improving as you go, and watch your mission grow.