Target Appreciated Securities to Unlock Impact, Meet Donor Needs 

For many nonprofits, charitable giving strategies still center on cash. While straightforward, this approach may overlook a significant opportunity to increase both the size and efficiency of donations. Targeting appreciated securities in fundraising and investment strategies can help endowments and foundations unlock greater philanthropic impact while aligning with sophisticated donor needs.

Why appreciated securities matter

Appreciated securities — such as stocks, mutual funds, and exchange-traded funds — are assets that have increased in value over time. When donated directly to a qualified nonprofit, these assets offer a dual benefit: donors can generally avoid capital gains tax while receiving a charitable deduction for the full fair market value, subject to IRS limitations.^1,2

This distinction is critical. Selling appreciated assets before donating can reduce the value of a gift by 20% or more due to capital gains taxes.² Direct donation preserves that value while providing benefits to both the donor and the recipient.

The nonprofit opportunity: Larger gifts, stronger outcomes

Nonprofits that actively accept and promote stock donations are positioned to significantly enhance fundraising outcomes. Research shows that organizations accepting non-cash assets like securities can see contributions increase by as much as 55% compared to those that rely solely on cash gifts.³

Several structural advantages drive this outcome:

• Donors often hold more wealth in appreciated assets than in cash
• Tax efficiency enables larger contributions at lower after-tax cost
• Strategic messaging around tax benefits can increase giving behavior

Despite this, many organizations still underutilize stock donations, often due to operational complexity or lack of awareness.

Tax efficiency and donor alignment

From a donor perspective, donating appreciated stock offers compelling tax benefits:

• Elimination of capital gains tax on long-term holdings
• Deduction of full fair market value (generally up to 30% of adjusted gross income)
• Ability to carry forward excess deductions for up to five years²

These advantages can be particularly meaningful in high-income years or during liquidity events. Additionally, donating securities allows donors to rebalance concentrated positions without triggering tax consequences — aligning philanthropic intent with prudent portfolio management.

Integrating donor-advised funds into the strategy

A complementary approach involves donor-advised funds, which can enhance flexibility for both donors and nonprofits. By contributing appreciated securities to a donor-advised fund (DAF), donors can:

• Secure an immediate tax deduction of the fair market value of the security donated
• Avoid capital gains taxes on the untaxed appreciation
• Recommend grants to nonprofits over time

For endowments and foundations, this structure can support more predictable giving flows and deeper donor engagement across multiple years.^1,2

Operational considerations for nonprofits

Historically, accepting stock donations required significant administrative effort. Today, advances in technology and custodial platforms have simplified the process considerably.

A typical framework includes:

• Establishing a nonprofit brokerage account
• Providing clear transfer instructions to donors and advisors
• Implementing policies for liquidation, reinvestment, or holding assets
• Ensuring proper documentation and donor acknowledgment

Streamlined processes not only reduce operational burden but also remove friction for donors.

Aligning with investment and governance objectives

For endowments and foundations, appreciated securities are not just a fundraising tool; they are a strategic asset. When incorporated into a broader nonprofit investment strategy, these gifts can:

• Support portfolio diversification
• Enhance after-tax returns
• Provide liquidity for near-term spending needs
• Contribute to long-term endowment growth

Governance plays a key role. Clear gift acceptance policies, investment guidelines, and coordination between development and investment committees ensure that incoming assets are managed in alignment with organizational objectives.

A strategic imperative

The data is clear: donors hold substantial wealth in appreciated assets, yet only a small percentage currently donate them.³ For nonprofits, this gap represents a meaningful opportunity.

By actively promoting stock donations, simplifying the giving process, and aligning strategies across fundraising and investment functions, endowments and foundations can increase contributions, improve donor outcomes, and strengthen financial sustainability.

In an environment where every dollar of impact matters, targeting appreciated securities is not simply an alternative — it is a strategic imperative. Our Endowments & Foundations team is here to help. If you want guidance and a partner for your organization, contact us.