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by Barlow Mann
Gifts of stock and mutual
funds outpaced charitable
bequests in 2006, according
to the summer 2009 Statistics
of Income Bulletin. The IRS report
focuses on individual non-cash contributions
in 2006, the most recent
year for which complete data is
available. The study is available
in its entirety at www.irs.gov.
In that year, the almost 25
million taxpayers who itemized
deductions claimed over $50 billion
in non-cash charitable gifts. Almost
$47 billion of this total was reported
by 6.2 million taxpayers on IRS
Form 8283, which is used for claiming
non-cash gifts greater than $500.
For purposes of the IRS, non-cash
charitable gifts include gifts
of stock, mutual funds, and other
investments as well as items such as
real estate, clothing, food, and household
goods.
In 2006, gifts of corporate stock
accounted for almost $23 billion,
just under half of the total for larger
non-cash gifts. This figure represents
a 40% increase over tax year
2005, when just over $16 billion was
donated. When gifts from mutual
funds are added to the mix, the total
for 2006 surpasses $24 billion.
In the same year, gifts from
charitable bequests generated $21.6
billion. In what may be surprising to
some, gifts of publicly traded stocks
and mutual funds actually exceeded
charitable bequest income in 2006.
Additionally, the $26 billion
total of stock, mutual fund, and
other investment giving greatly
surpassed the total given in other
types of property. For instance, the
$26 billion figure was seven times
greater than the total of gifts of
real estate and land ($3.6 billion).
As may be expected, the number
of returns reporting non-cash gifts
of all types of property increased
with the taxpayer’s reported income.
The greatest number of returns
reporting non-cash gifts fell into
the $75,000-$199,999 income range.
With just over 3 million returns, this
group accounted for over half of the
6 million returns reporting non-cash
gifts.
The amount of non-cash gifts
also rose with income level. Those
with incomes greater than $200,000 gave over half of the total non-cash
gifts reported on the 8283 form.
What the numbers mean
Fundraisers will be especially
interested in how these figures could
and should impact their efforts going
forward. In the latter part of 2009,
donors finally saw a much-anticipated
upturn in the stock market.
In mid-October, the stock market
reached 10,000, a figure many feared
they would not see this year. This
high-water mark represents an over
3,000 point gain since the market
reached its low of under 7,000 in
March. Donors may finally be ready
to again consider gifts of securities
after a long and prudent wait.
As donors begin to contemplate
such gifts, fundraisers must know
how to advise them. Of special
importance is knowing how best
to direct limited budget dollars for
greatest impact.
The following breakdown by
age of the 201,613 returns reporting 451,953 gifts of stock, mutual funds,
and other investments valued at $26
billion will give some idea of who is
likely to give appreciated securities.
Note that approximately 60%
of the total amount of securities gifts were made by persons
age 65 and older. Some 71%
of the number of gifts were made
by persons age 55 and older. In 2005, IRS reports reveal
some 51% of stock, mutual fund, and
other investment gifts came from
persons 65 and older, with 72% coming
from those 55 and older. The
August 2008 issue of Give & Take
contains more details of 2005 giving.
Turn to the matrix
Once again, age and wealth
appear to be important factors to
consider in marketing non-cash gifts
generally and gifts of appreciated
securities in particular. In developing
your strategy for non-cash major
gifts, it may be useful to consider
the Sharpe Gift Planning Matrix©.
The IRS study indicates that the
A1, B1, and C1 groups are the primary
prospects for larger non-cash
gifts, particularly gifts of stocks and
mutual funds. Of all the segments of
the matrix, the C1 box (containing
older and wealthier donors) is the
source of the greatest number and
amount of securities gifts.
When designing your communication
plans to encourage non-cash
gifts, age and wealth criteria may
not always be available. In such
cases, the size of previous gifts may
be substituted for selection purposes.
Consider promoting gifts of
securities with all donors of more
than $500, $1,000, or some other
amount you deem appropriate. In
doing so, you will naturally pick up
many in the A1, B1, and C1 groups.
For donors over 65, you could lower
gift amount criteria to $100 or $250
to include some in the C2 category.
Consider the focus that many
organizations rightly place on gifts
of bequests, gift annuities, and
other life income plans. Given the
fact that gifts of appreciated securities
appear to be producing income
in amounts similar to if not greater
than bequests and that the majority
of those gifts are coming from
those age 65 and older, perhaps
additional emphasis should be
placed on encouraging such gifts.
As fundraisers know, if you do
not ask, you will not receive. With
the recent rally in the stock market,
now is the time to reach out
to your most loyal constituents to
make the case for gifts of securities
before the year—and the opportunity
for year-end gifts—come to an
end.
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