If there’s one thing nonprofits know how to do, it’s adapt. The world is always evolving, bringing both new opportunities and new challenges. We’ve seen a lot of changes and disruptions in the industry over the past 60 years. In that time, Stelter has partnered with nonprofits to help them navigate uncertainty, strengthening their financial foundations and continuing to build lasting donor relationships.
With the current economic uncertainty, it has become increasingly important for nonprofits to diversify their fundraising efforts. Relying solely on one or two sources of income—whether it’s grants, annual giving or your endowment—can leave your organization vulnerable to fluctuations in the market, shifting funding priorities or changing donor behavior.
One of the most effective ways to future-proof your nonprofit’s revenue stream is by investing in planned and asset-based giving options. As we saw during the 2008-09 economic crisis and the recent COVID-19 pandemic, these strategies provide long-term, sustainable support that isn’t tied to day-to-day fluctuations. By expanding your fundraising approach, you can build a stronger foundation—one that allows your organization to focus on its mission with confidence.
Why Diversifying Revenue Is Critical for Nonprofits Right Now
Uncertainty Is the New Norm. The world is facing an era of unprecedented uncertainty, from an evolving legislative landscape to geopolitical tensions to fluctuating financial markets. Nonprofits must adapt to ensure they can withstand periods of economic instability. Having multiple revenue streams reduces the risk of relying too heavily on one source that may dry up in tough times.
Donor Behavior Can Change Rapidly. Economic crises or health emergencies often cause people to reassess their financial priorities. For example, during the COVID-19 pandemic, many donors temporarily reduced or paused giving due to financial insecurity. Nonprofits that had invested in diversified funding sources were able to weather this storm better.
Greater Financial Stability is Necessary. By focusing on planned and asset-based giving, nonprofits can build a long-term, stable revenue stream. Unlike traditional donations, planned gifts are often structured to support organizations over many years, if not decades, which helps reduce the financial volatility seen during times of crisis.
The Case for Planned and Asset-Based Giving
1. Planned Giving: A Long-Term Investment in Stability
Provides Predictable Revenue Streams. Planned giving involves donors committing to give a specific amount through their will, trust or other future arrangements. These gifts are typically not received until after the donor’s passing but provide organizations with a steady stream of support over time.
Mitigates Market Volatility. Unlike direct donations that depend on current financial conditions, planned gifts are immune to market fluctuations. During times like the 2008 housing downturn or the COVID-19 pandemic, organizations with established planned giving programs were more insulated from immediate revenue losses.
Strengthens Donor Relationships. Planned giving offers supporters a way to leave a legacy. Having a planned giving conversation with major donors can prove to deepen relationships, encouraging them to think long-term about their impact. This can strengthen overall organizational loyalty and ensure continued support for the future.
Additionally, adding donors to your legacy society is likely to have a positive impact on overall giving, retention and stewardship opportunities. Professor Russell James III, J.D., Ph.D., CFP®, found that annual giving by donors increased by about 75% after they added a charitable estate planning component to their will.
2. Asset-Based Giving: Unlocking Greater Value From Donors
Gifts of Appreciated Assets: Asset-based giving includes donations of stocks, bonds, real estate and other appreciated assets. These gifts not only allow donors to avoid paying capital gains tax but also provide nonprofits with a significant revenue stream that isn’t tied to the current cash flow of the donor.
Research from Dr. James found that pursuing gifts of assets was a key predictor of current and long-term fundraising growth. James tracked hundreds of thousands of nonprofit organizations from 2010 through 2016 and found that those nonprofits reporting non-cash gifts grew their contributions on average 50%, with those reporting gifts of securities growing on average 66%. The nonprofits reporting only gifts of cash grew on average just 11%.
Sustainable and Large-Scale Contributions: When nonprofits encourage gifts of appreciated assets, they open the door to larger, more impactful donations. Real estate and investments often appreciate at a much faster rate than personal incomes, so donors can give more without impacting their day-to-day finances.
Expanded Donor Options: The option to donate non-cash assets might appeal to high-net-worth individuals who are less inclined to give traditional donations. Nonprofits that highlight non-cash assets offer donors an opportunity to get out of the ‘checkbook mentality’ (i.e. what can I afford to give to charity right now). Legacy gifts from these donors can be transformational for your nonprofit.
Jackie Franey, formerly of The Nature Conservancy, dove deeper into this idea in her 2021 webinar, “Winds of Change: An Organizational Shift in Non-Cash Assets Fundraising.” Franey detailed how The Nature Conservancy embraced the mental framing research of Dr. Russell James by integrating gifts of non-cash assets into discussions of philanthropic giving options with donors and highlighted the evolution of their gift planning fundraising team. You can view the recording here.
Historical Context: How Diversified Fundraising Weathered Storms
The Economic Crisis of 2008-09
Many nonprofits experienced a sharp decline in donations during the 2008-09 economic crisis, especially those solely dependent on individual and corporate giving. However, organizations that had robust planned giving programs fared better.
Since planned giving typically comes from individuals who are making long-term commitments, these gifts were largely unaffected by short-term fluctuations in the economy. Nonprofits that were already investing in these programs before the crisis were able to continue receiving support during a time of financial uncertainty, giving them a critical advantage over organizations that had fewer diversified revenue streams.
The COVID-19 Pandemic
Countless nonprofits suffered from an immediate drop in donations during the COVID-19 pandemic, especially from their donors who were hit hard by the economic fallout. However, organizations with well-established planned giving programs saw less of a decline. This was due to the nature of planned gifts, which are often designated far in advance and are not tied to the immediate financial state of the donor.
For example, organizations with solid asset-based giving options, such as donations of real estate or stocks, were able to tap into a donor base that had more significant assets, which proved to be more resilient in a time of crisis.
Key Takeaways: How to Build Diversified Revenue Streams for Your Nonprofit
1. Start Building a Planned Giving Program Now
If you don’t already have one, now is the time to start. While a planned giving program takes time to establish, even a small group of committed donors can provide a solid foundation for long-term support.
Resources to help you get started:
- Stelter’s Webinar Library: Expert advice on starting a program, having a gift planning conversation, getting your Board on board and building donor loyalty.
- National Association of Charitable Gift Planners Conference: The largest annual gathering of gift planners committed to the art and science of charitable gift planning. Nonprofits of every size and scope are represented by professionals in all stages of their careers.
- National Standards for Gift Planning Success: Best practices for gift planning programs that are growing, pipeline-focused and sustained over time.
2. Encourage Asset-Based Gifts
Make sure donors are aware of the ability to give appreciated assets, whether that’s real estate, stocks, or other high-value assets. Consider setting up mechanisms to make it easy for donors to donate these items.
- Watch This Webinar: “Charitable Gifts of Business Interests, Real Estate and Cryptocurrency,” presented by Bryan Clontz, Ph.D., CFP®, CAP®, AEP®.
3. Communicate the Long-Term Impact
Help your donors understand that by investing in planned or asset-based giving, they are creating a lasting legacy for themselves and your organization. Emphasize the importance of stability, especially in uncertain times.
- Read This Blog: How to Convert Donors When the Going Gets Tough
4. Diversify Your Revenue Sources and Marketing Channels
Beyond planned and asset-based giving, continue to explore other fundraising opportunities, such as corporate partnerships and grants, and by expanding your reach through digital channels. The more diversified you are, the less vulnerable you will be to shifts in any one area.
- Read This Blog: Say Yes to the Gift: 5 Resources That Can Help Your Nonprofit Accept More Gifts
- Read This Blog: Increase Response: How to Coordinate Direct Mail, Email and Social Media Posts
Building Financial Resilience
We know that nonprofits are dealing with increasing challenges due to uncertainty—whether it’s the economy, politics or even public health. The good news? Diversifying your fundraising strategies, especially with planned giving and asset-based donations, can help you build a stronger, more resilient financial foundation.
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