The Power of Non-Cash Assets
"Can you write us a check?"
This is how most requests for support to your ministry are worded. It makes sense that we ask for a donation in that manner – “Write us a check”. After all, probably 99% of the individual gifts that come to you are in the form of a check. As a result, it is easy to assume that 99% of your entire ‘financial support’ is in the form of checks.
Not so fast, my friend!
Think of your own net worth. In addition to whatever cash you have in the bank, you likely have a house and a car, an IRA, insurance policies, and maybe ownership in your own business or other investments. Your cash in the bank is probably less than 1% of your net worth.
In fact, if you added up all the assets you could conveniently access, it will probably be less than 15% of your net worth. By assets that you can ‘conveniently access’ I mean money in your bank account, savings accounts, CD’s and other similar current assets. These are considered your ‘liquid assets’. For most liquid assets are less than 15% of their net worth.
Most people only keep enough money in their bank account to adequately cover expected expenditures. People who are wise stewards of money don’t like to have idle funds sitting around, especially in significant amounts. Even the very wealthy are usually careful not to keep too much in accessible cash in order to keep their money working for them.
If your fund-raising strategy is limited to getting a check ‘right now,’ you need to understand that you are asking for a donation from people’s small pocket. You are competing with the electric bill, the house payment, food and gas bills and several hundred thousand other non-profit organizations that are asking for dollars from that same small pocket. You are asking for a contribution from that donor’s discretionary income.
Some religious foundations have concluded that almost 95% of the support for churches come from only 15% of the members’ assets. Yes, you are correct if you did some reverse math and decided that meant that only about 5% of churches income is from the other 85% of their members’ wealth.
The fact is: significant gifts to your organization rarely come from discretionary income. It may come in the form of a check, but it did not come from liquid assets. It likely came from some appreciated asset – those other assets we have that represent the bulk of our net worth.
There are attractive tax incentives for a donor to give an appreciated asset. In addition, someone who really wants to help your organization has more money available in that form than they have in the bank. Now it may take time to make the necessary arrangements before they can give it.
This is one reason fund-raising is called ‘development’. Significant gifts have to be ‘developed’. You may approach a potential donor and tell them the story of your ministry – whether we are talking about a church or non-profit organization. Even if they are immediately on board (which is not likely after one introductory visit), they cannot just immediately write a check that will make a difference in your campaign or your mission.
In all likelihood, you may need to meet with them several times to ‘develop’ their interest in your organization, as they assess how important your cause is to their values. Then, if they decide to support your cause, additional time will likely be needed to arrange their finances, especially if their gift is going to be a truly significant gift.
The organizations that are most successful with their development programs learned long ago that the huge - really significant - gifts are those gifts from appreciated assets of generous people who believe in their mission. University endowments, charity hospitals, large institutions have all benefitted from donors’ appreciated assets - the ‘deep pocket’ part of their net worth.
For sure, every organization (including every one that I am associated with) depends on many people writing a check regularly. We all have to have them (our fixed expenses usually are paid by them) and therefore we thank God for every gift that comes. However, the gifts that are the real ‘game-changers’ are the gifts that are from donor’s net worth, from their appreciated assets.
Understanding the value of seeking gifts of appreciated assets is perhaps the most important concept you will ever learn about successful fund-raising.