How to Maximize Philanthropic Support

In 2022, inflation rates peaked at over 9% – the highest since 1982. And unfortunately, average salaries have not followed the same trend. So, as Americans tighten their belts and cut out nonessential costs, philanthropic support suffers. And although your cause is worthy of support, charitable donations often take a backseat when things get tight. To find the solution, you may have to get creative with your fundraising – like by expanding ways to give and exploring new partnerships – to maximize your impact and ensure you don’t leave any money on the table.

Accept Cryptocurrency

Cryptocurrency (crypto) may seem like one of those buzzwords you constantly hear in the news or see on social media, but it’s anything but. The rise of crypto has taken the world by storm, and if your organization doesn’t keep up, you could potentially be missing out on hundreds of thousands of charitable dollars.

What is Crypto?

First things first – let’s unpack what crypto is. According to USA Today, cryptocurrency is a digital currency secured through encryption. It works on a system called the blockchain, a public ledger or database updated in real time to record all transactions using that specific cryptocurrency. Using the blockchain keeps all transactions secure and transparent, and anyone can access the data.

Unlike traditional currencies, cryptocurrencies are decentralized and do not require the backing of a central party, such as a government or central bank.

Why Crypto?

As we mentioned before, crypto is booming. According to a report by Crypto.com, global cryptocurrency users doubled from 100 million in January 2021 to 200 million in May 2021, with new users joining every single day.

For users, donating crypto rather than cash to charitable organizations offers several advantages. One of the main advantages? Tax breaks. Like donating stocks, donating crypto can be tax-efficient, as it’s not subject to capital gains taxes and can be deducted from the donor’s gross income. And because of the blockchain, crypto donations are much easier to track than cash ones, simplifying the documentation process for tax purposes.

There are benefits for nonprofit organizations, too, such as flexibility. Technology has revolutionized the way complex transactions are executed. Your organization can receive philanthropic support via crypto donations from anywhere in the world with no need for currency conversion or transaction fees, ensuring that you receive the support and donations you need with greater ease and efficiency. There’s also the obvious point that the more types of donations your organization accepts, the more donations you’re likely to receive.

Plus, staying up to date on new financial technology is crucial in the philanthropic world. Millennials and Gen Z are quickly growing as key audiences for nonprofits – according to Vanguard Charitable, 60% of Millennial and Gen Z donors say they’re more likely to give more money to charity over the next year than they did in the last year. That’s quite a bit higher than Gen Xers (40%) and Baby Boomers (39%).

And while it’s probably no surprise, 94% of crypto buyers are Millennials and Gen Zers. So, our tip is to meet your donors where they’re most comfortable!

Embrace Donor-Advised Funds

Unlike crypto, donor-advised funds (DAFs) are not new – the first DAFs were established almost 100 years ago. However, their popularity is on the rise, increasing by a staggering 400% in the last decade alone – meaning your organization’s participation should start now.

What are DAFs?

According to the National Philanthropic Trust, a DAF is a charitable giving account that is established at a public charity (501(c)(3) organization). This organization serves as a “sponsoring organization” and manages and administers individual DAF accounts. Essentially, DAFs are investment accounts that can solely be used for charitable giving. Donors can contribute cash as well as assets, including stocks, shares of mutual funds, publicly traded securities, private assets, and crypto.

Why DAFs?

By making a charitable contribution to their DAF account, donors receive an immediate tax deduction. They can then recommend grants from the fund to their favorite charitable organizations over time. Donors can contribute to the fund as frequently as they like and then grant funds to their favorite charities whenever they choose.

This approach allows donors to be flexible in their giving, enabling them to donate when they can and then recommend grants when needed.

Nonprofit organizations can benefit from DAF gifts as they require less maintenance and administrative work than other non-cash assets. When a donor donates a non-cash asset like stock to a DAF, it can be immediately liquidated. This means your nonprofit can receive philanthropic support without coordinating with a brokerage, making the process simpler and more efficient.

Because most DAFs require a contribution between $5,000 and $25,000, they’re a popular choice for wealthy donors. Be sure to ask major donors if they have a DAF, and if not, provide social proof about their benefits.

Stewardship is also key. Your organization should implement a stewardship plan to foster and grow your relationships with DAF donors since most DAF grants are given to nonprofits the donor previously supported. Therefore, building a lasting relationship with these donors is the key to long-term success. By doing so, you will likely receive more frequent and more significant gifts from them.

Explore Corporate Partnerships

One may think nonprofit and for-profit organizations don’t typically walk hand-in-hand, but that’s untrue. Charitable giving by corporations totaled $29.48 billion in 2022, and there are countless benefits to entering a partnership with the right business.

What is a Corporate Partnership?

A corporate-nonprofit partnership is a collaboration between a nonprofit and a corporate sponsor to work toward shared values and goals. These partnerships should be mutually beneficial, helping to pool resources and expertise and expand reach.

Why Corporate Partnerships?

A successful corporate-nonprofit partnership can benefit both nonprofits and for-profits. In one scenario, a nonprofit receives monetary donations or in-kind gifts, while a for-profit business receives positive publicity and tax benefits. Every corporate-nonprofit relationship is different, and both parties should be upfront and honest about what they hope to achieve from the partnership.

For many nonprofits, the benefits of a corporate partnership include the following:

• Increased operating funds: In exchange for their name on promotional materials or events, a business will make significant donations to a nonprofit organization.
• Expanded influence and reach: Corporate partnerships can introduce your nonprofit to individuals who may not have otherwise encountered it. Established businesses usually have strong relationships within the community, which they can leverage to assist your nonprofit in expanding its network and thriving.
• Additional volunteers: When businesses partner with nonprofit organizations, some of their employees may become inspired to volunteer.

Conclusion

In a world where economic challenges strain traditional fundraising, innovation is critical. Expanding your reach with cryptocurrency acceptance, donor-advised funds, and corporate partnerships can open new avenues for philanthropic support. By adapting to changing landscapes and engaging donors in meaningful ways, nonprofits can not only survive but thrive in their mission.

Need assistance securing a sustainable philanthropic future for your organization? The experts at Graphcom are here to help!