Why your process of receiving stock donations is making you lose money

7 Minute Read
Posted by Overflow Team on May 4, 2022

Tags: Drops

Perhaps you understand the vast benefits of stock donations, from higher giving amounts to avoidance of capital gains tax. And perhaps knowing those benefits, you've already found a way to accept stocks the traditional way. Sure it takes more time, but it doesn't cost anything extra.

Paying for a service like Overflow to facilitate your stock donations may seem counterintuitive. A.) Why would we need it? Our organization already accepts stock, and B.) paying to accept stocks takes away from the overall value of the gift, right?

Our goal today is to unpack these two perceptions and break down why Overflow's relatively small upfront cost (plus associated transaction fees) saves headaches, builds convenience for the organization and donors, and ultimately increases your overall giving.


2. Breaking down the process

It's true that any organization has the ability to accept stocks, regardless of if they use our service. Here's how the traditional process works for donating and accepting stocks:

In a time where seemingly every process is going digital, this process will feel incredibly clunky and outdated. It's why over 1 million charities and nonprofits in the US are limited in their ability to accept non-cash donations.

First off, you have to work with each donor to send and process a stock donation form, and ensure that the gift gets accounted for correctly. (And that's assuming that your nonprofit even has a brokerage account the donor can work with in the first place.)

Next, an acknowledgement letter has to confirm the accuracy of the transaction. If anything gets filled out incorrectly, the process has to be restarted and amended. This involves several people from your organization having to track, manage, and process an individual gift every single time. Think of it like writing and mailing a check for every bill you have instead of setting up AutoPay.

Scott Patton, director of development for the nonprofit RIP Medical Debt, spoke about the tedious nature of constant communication with donors – a major time drain for him and his colleagues.

"We had donors. I mean, I would have half a dozen inquiries saying: ‘hey, where can I send this or make these stock donations?’ I would say that it was marked first by being under-resourced from a time perspective and then being under-resourced from a communications and transparency perspective," Patton said.

Time aside, many may not realize how much money can potentially be lost as donors get caught up in the weeds. Companies like Amazon or Disney have turned to subscription based models to ensure convenience and customer retention. The fact that we can use our thumbprints or FaceIDs to make a purchase, or that we pay a little extra for two-day Prime shipping reminds us that the path of least resistance is highly appealing.

Mark Francey, pastor of Oceans Church, added: “We all know that the window of people's hearts being generous isn't always a long window, and it's kind of a short attention span. For us it's [awesome] that someone could click on a link and really from start to finish or give a stock or give something that's valuable to them. It's a short [30-60 second] transaction as opposed to calling Merrill Lynch or Ameritrade and saying, "I want to transfer this here and there." And then 40 people are involved. You'd have to be pretty dedicated to go that route."


3. How Overflow works

In contrast with the "traditional" stock giving process, we boil it down to a matter of clicks. Moreover, we handle any back and forth between the brokerage, donor, and organization.

As mentioned before, this is a service and has small costs associated with it. However, we want to reiterate that it isn't just about saving time. Lots of services save you time yet still burn a hole in your wallet. From a purely numbers standpoint, Overflow has always been a value add for the 200+ nonprofits and churches we work with.

We've had an overwhelmingly positive reception to our giving platform, as donors feel confident in both the expedience, security, and reliability it entails. This has in turn emboldened them to give both consistently and generously, evidenced by the fact that as of May 2022, the average Overflow donation is 120x higher than a typical cash/credit donation.

And this number keeps going up.

We like to say that the return on investment isn't a matter of if, but when. If you want to see the numbers fully fleshed out, we encourage you to read a blog by our CEO, Vance Roush that breaks everything down in detail. But in the meantime, here's the point:

If the initial startup cost or transaction fees associated with Overflow is a concern, the above point shows that the revenue coming in far outweighs the cost. You may be gun shy about "wasting" money when each dollar is precious and purposeful in the nonprofit and church world. However, you may be potentially losing out on more money by not accepting stock or crypto donations with Overflow in the first place.

Think of us like a magnifying glass that amplifies the generosity that's already there. In addition to saving time, we help make donors happy and content with the process. As Scott Patton reiterated:

"​​The time savings is significant! That, plus the better user experience for our most important donors, is well worth the subscription fee.”

By giving people an additional option of donation, you're maximizing and making best use of the collective resources of the community. Think about how many times you've been stymied by a "cash only" cafe. At this point, who even carries cash?

We know you may already be aware of the value of stock donations, as stated before, but the point we're trying to drive home is that keeping an antiquated stock giving process hinders how effectively stock donations can be used as a tool.

From a technical standpoint, our clients receive access to our user friendly giving platform. From a public-facing standpoint, you can easily add a button to your organization or church's website that links them to the Overflow giving experience. Let's say you decide to use our stock giving platform – here's how it works:

1) First, a donor clicks your 'Give Stock' link and is able to connect their brokerage account to see their portfolio and select which shares they want to give.

2) Next, once the shares are selected by the donor, they authorize the gift to be sent to your organization and then submit.

3) Once submitted, the shares are transferred from the donor's brokerage account directly to the nonprofit.

4) Overflow automates the generation of Charitable Acknowledgement Letters to enable you, the nonprofit, to send the completed letter to the donor with a click of a button.

It's one thing for us to tout that it's "easy to use" or simple, but this has been the first hand experience of our clients. As Ellen Paik, Fund Manager at the nonprofit New Story remarked:

“Overflow has dramatically simplified our stock donation process, allowing our team to spend more time focusing on our mission! It's a notably better donor experience compared to before.” Ellen Paik, Fund Manager at New Story.



4. Book an Overflow demo

By providing the above stats and figures, we're simply trying to illustrate the point that there's no catch. No hidden manipulation. Only proven results.

We'd never ask you to just "take our word for it," as many companies advertise. So if Overflow even remotely piques your interest or aligns with the interests of your organization, we encourage you to book an Overflow demo.

This is just a 15 minute introductory call to walk you through the process of a potential partnership, and (most importantly) get to know you. There's no strings attached to this process, nor will we spam you if you provide your name, phone, and email.

Or if you've ever spoken with an Overflow team member, we encourage you to follow up. We put a premium on availability, and as such make every effort to ensure that you can have any questions or concerns addressed by a real person.