Posted October 1st, 2015

Market Volatility May Spark Year-End Giving

Stock exchange graph background

Recent stock market volatility and economic concerns have been all over the news. On August 24, the Dow Jones Industrial average opened with a 1,089-point plunge. Throughout the day, levels rose and fell again, ending with a 13.3 percent fall from the Dow’s historic high. While the markets have stabilized in recent months, many investors are taking a closer look at their portfolios, realizing gains in some instances and repositioning their investments.

Wealthy donors still have quite a bit of appreciated property when compared to previous years’ lows for real estate and securities. So long as salaries and unemployment levels remain stable or improve slightly, charitable giving should continue at “recovery levels.”

Giving appreciated securities

One strategy that may prove effective for donors this fall is to fund charitable gifts with appreciated securities. This allows them to deduct the entire value of the securities, including any gain, while not being subject to tax on their gain. They can then use the resulting charitable deduction to offset tax on other income, including any gain that may have been realized on the sale of other appreciated securities. In some cases, donors may have sold securities at a loss. They would then be able to give cash generated by the sale and often also benefit from deducting all or a portion of the loss.

Bolster your year-end fundraising communications.

To ensure your organization is among those that will benefit from current market conditions and increased scrutiny of their investments by donors, make sure your donor communications explain the continued benefit of giving noncash property this fall. This may be a helpful way to encourage donors to consider upping their giving this year. Help them discover that by giving securities that have increased in value, they can make larger gifts at the same cost to them.

Special attention should be focused on a small number of major gift prospects. Make sure this group is properly informed about the best gifts for the current economic environment and is then asked to make an appropriate gift during the final months of the year.

In addition, double check your plans or the fourth quarter and make sure pledge reminders, as well as phone, mail and digital appeals and fundraising events, are executed effectively and include information on the best ways to make gifts. During the months of November and December, monitor gift records and make special efforts to communicate with those who have made gifts of securities in recent years. Searching records for gifts of odd amounts can help you find such donors if you don’t specifically track gifts of securities.

Plan for uncertainty.

The recent market correction has caused many to pause and reflect on their financial well-being. Though many experts report that recent market corrections have been expected for some time and many commentators do not see this as cause for overall economic concern, being prepared and maintaining a strong fundraising program can help your organization weather the inevitable ups and downs of the economy. ■Donor Fears

Consider fortifying your end-of-year donor appeal with one of our Year-End Giving brochures. Click here or contact us at info@SHARPEnet.com or 901.680.5300 for details.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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