How to Talk to Donors About Their Investments

The difference between soliciting annual gifts and major gifts involves a paradigm shift of talking to donors about a gift that they could cover with cash in their checking account, to money that is being invested and earning a return for them. Families with the means to make five-figure donations are financially savvy enough to keep those dollars in revenue-generating investment vehicles like stocks, mutual funds, real estate, or a number of other options. 

There is a mutually beneficial aspect of supporting a charity with non-cash gifts: avoiding capital gains taxes. Some donors might mention that they have been selling stocks to make pledge payments instead of donating securities directly. While they have been paying a hefty capital gains tax, they could have been deducting the full fair market value of their non-cash contributions. Granted, these days very few individuals itemize their income taxes and benefit from charitable tax deductions (12%), but major gift officers work with top earners and must keep donor interests in mind. 

Practically speaking, how do you breach the topic of investments in a conversation over lunch? For some individuals it is a private matter and they will quickly change the subject. However, many investors are passionate about their portfolios and take great pride in their gains over the years. For retirees, investments generate most of their income and they may watch the stock market in earnest.

Many professionals hit their peak earning years by the age of 45 and devote the greatest proportion of their income towards paying off debt and saving for retirement in that stage of life. To get a feel for these individuals’ comfort level with discussing investments, I find it easier to start by commenting on the economy broadly. Unemployment statistics come out every month, and quarterly earnings reports can herald wild swings in daily stock index prices - there’s always some news to mention and see if it piques interest. 

Donors who consider themselves to be expert investors sometimes relish the opportunity to share some insight or personal success with their portfolio. As the topic opens up, try asking this question - how often do you make adjustments and “clean up” your portfolio? If it’s once a year, do you prefer the calender year-end, or maybe the spring? While trimming some underperforming stocks, it’s a good opportunity to convert some into charitable gifts. 

There is a familiar adage among startup entrepreneurs that if you want money, ask for advice. It’s entirely productive in a donor meeting to encourage them to share investing wisdom and examples of what they do with their wealth. You can learn so much about an individual’s giving capacity in this conversation that you wouldn’t be able to research on your own. Do they own stock in a private company? Did they get in early with MSFT, AMZN, or even more recent stars like ZM? Are they on the cutting edge of cryptocurrency investing?

Often the biggest non-cash major gift opportunity is with real estate, and these gifts are heavily reliant on timing. If a donor is thinking about selling a property and would consider making it a charitable gift, you need to be in front of them at just the right time. One way to learn about second properties is to ask about favorite vacation spots and where they like to stay when they visit. However there are more than just vacation condos - you could be discussing an inherited home from a parent who has passed away, a rental property, or even the family farm. 

A great way to tie this conversation back to the mission is to frame a non-cash donation as an investment opportunity in the important work your organization is doing. Is there a new program being launched, or service site opening, that will really take off once a few funders come on board? Smart investors understand that timing is every bit as important as having capital in the first place. The concept of a charitable gift as an investment in an organization’s programs and strategic vision appeals to those with a business sense. It is a rational argument, rather than emotional, but it can be effective for those who want to make an impact and are looking for an effective community partner. Once you establish a close relationship with a donor as a sort of philanthropic advisor, try to discuss financial investments and the best way to maximize a return on their charitable dollars.