Why Most Nonprofits Are Fundraising from the Wrong Side of the Balance Sheet

Randal Evans | randalevans.com/writing | March 2026

2.3%. That number should change how every nonprofit approaches fund development.

That figure comes from researcher Russell James, drawing on Federal Reserve household balance sheet data. It represents the share of American household wealth held in cash and checkable accounts. The other 97.7% is in real estate, securities, business interests, retirement accounts, and other noncash assets.

Now consider how most nonprofits raise money. They send direct mail appeals. They host galas. They run annual fund campaigns. They make phone calls. They ask for checks and credit card gifts. Nearly all of this effort– the vast majority of staff time, strategy, and emotional energy in the development office– is directed toward that 2.3%.

James puts it memorably: nonprofits are “desperately fighting over the kiddie pool while ignoring the ocean.”

This is not a minor inefficiency. It’s a structural misalignment between where donor wealth actually sits and where fundraising effort is concentrated. And it has consequences not just for revenue, but for the kinds of relationships organizations build with the people who care most about their mission.

The Mismatch

The specific numbers vary depending on how you define “cash” and whose balance sheet you’re examining. If you broaden the definition to include savings accounts, money market funds, and certificates of deposit, the cash share rises somewhat– perhaps to 10–15% for a typical household, and still under 10% for affluent ones. Global wealth reports from UBS, McKinsey Global Institute, and Allianz consistently confirm the same pattern: real assets and financial assets other than cash dominate household net worth. Cash is the thin residue on top.

Yet in the charitable sector, over 90% of gifts by count are still made in cash. The fundraising infrastructure– the tools, the training, the culture– is overwhelmingly oriented toward a resource that represents a small fraction of what donors actually own.

This matters because noncash assets are not just a larger pool. They are, in many cases, a more tax-efficient pool. A donor who gives $50,000 in long-term appreciated stock avoids capital gains tax on the appreciation and receives a full fair-market-value deduction. The same donor writing a $50,000 check gets only the deduction. The stock gift costs the donor less, accomplishes more for the organization, and leaves the donor’s cash flow untouched. Bryan Clontz, author of the practitioner’s manual Charitable Gifts of Noncash Assets, summarizes the principle simply: from a tax perspective, cash is the least efficient charitable asset, and long-term appreciated capital assets are the most efficient.

So the mismatch is not merely about missing a larger bucket of resources. It is about systematically choosing the least efficient giving vehicle for both the donor and the organization.

What Happens When Organizations Make the Shift

If the mismatch is the problem, you would expect organizations that begin accepting noncash gifts to see meaningful differences in their fundraising trajectories. And that is exactly what the data show.

Russell James analyzed more than one million IRS nonprofit tax returns (Form 990) covering a multi-year period. His findings are striking. Nonprofits that received noncash gifts experienced approximately 50% growth in total contributions over five years. Organizations receiving only cash saw about 11% growth over the same period. Those receiving gifts of securities– the most common and accessible noncash vehicle– saw even higher growth, in the range of 60% or more depending on organizational size.

These results held across nonprofits of varying sizes, from small organizations with annual contributions under $100,000 to large ones with annual contributions of $10 million or more. The pattern was consistent: accepting noncash gifts was associated with a meaningfully faster fundraising growth trajectory.

This does not mean that simply adding a stock-gift option to your website will transform your revenue. What it suggests is something more fundamental: organizations that develop the institutional capacity and willingness to engage donors around their full balance sheets– not just their checking accounts– tend to enter a different kind of relationship with those donors. And that different relationship produces different results over time.

Two Different Conversations

The distinction is not only financial. It is psychological.

James draws an important line between what he calls “cash conversations” and “asset conversations.” A cash conversation operates within the donor’s sense of disposable income. It activates a mental framework in which giving competes with other current expenses: the mortgage, tuition, a vacation, and this month’s bills. In that frame, a large gift feels unreasonable. The reference point is small.

An asset conversation activates a different mental framework entirely. When a donor considers their wealth– the equity in their home, the balance in their brokerage account, the value of a business they built over decades– the reference point shifts. A gift that would feel extravagant in a cash context may feel quite natural in an asset context. Research confirms that reminding people of their total wealth holdings makes them feel wealthier, and feeling wealthier increases giving.

James illustrates the psychology with a simple example. If you receive a $200 cash bonus today, it might change which restaurant you choose tonight. If the shares in your brokerage account go up by $200, it will not. Financially, these are identical. Psychologically, they are different. They live in different mental accounts. And different mental accounts produce different giving decisions.

This is why the shift from cash fundraising to asset-based fundraising is not just a technical adjustment. It is a shift in the kind of conversation you are having with your donors– from a disposable-income conversation to a wealth-sharing conversation. The former constrains generosity. The latter expands it.

What This Looks Like in Practice

For most community-based nonprofits, the noncash giving opportunity begins with publicly traded securities. Gifts of stock and mutual fund shares are the most accessible entry point: they are straightforward to value, relatively easy to liquidate, and familiar to both donors and their advisors. An organization that can receive a stock gift– with a simple, well-informed process and someone on the team who knows what to say when donors ask– has taken the most important first step.

Beyond securities, the landscape becomes more varied and more complex. Real estate is often a donor’s single largest appreciated asset. Closely-held business interests can be extraordinarily powerful giving vehicles, particularly before a sale or liquidity event. Life insurance policies, agricultural assets, mineral interests, virtual currency: each has its own technical considerations, risks, and opportunities.

Retirement account assets deserve particular attention, because they occupy an unusual position in the planned giving landscape. Qualified charitable distributions (QCDs) for donors over the eligible age are a growing category that many organizations are only beginning to capture– and unlike bequests and most other planned giving vehicles, QCDs produce current-year revenue. One mid-sized nonprofit saw two separate $100,000 QCD gifts from donors who had reached the required minimum distribution age. As one planned giving professional put it, these are gifts where “nobody has to die for them to give you money.” For organizations building a planned giving program, QCDs and charitable trusts that generate annual distributions are strategically important precisely because they deliver resources now, not in the indefinite future, while still drawing on the planned giving infrastructure and relationships the organization is building.

The point is not that every organization needs to become expert in every noncash asset category. It is the fundamental orientation that matters. An organization that thinks of itself as a cash-raising shop will miss opportunities sitting in plain sight. An organization that understands– and communicates to its donors and their advisors– that it is open to noncash gifts positions itself to receive them.

This positioning requires some infrastructure. At a minimum, it means having a gift acceptance policy that addresses noncash contributions. It means preparing the most appropriate team members to ask different questions in donor conversations– not just “Would you like to make a gift?” but “What does your balance sheet look like, and how might we work together to find the most efficient way for you to support our mission?” It means being strategic about who has which conversations, based on what the donor or prospect needs, not on internal titles or organizational lanes. And it means building relationships with the professional advisors– CPAs, estate attorneys, financial planners– who sit across the table from donors when these decisions are made.

For organizations that want to go further, intermediaries can help. Community foundations, national gift funds, and specialized organizations focused on complex assets can accept, hold, and liquidate noncash contributions on behalf of smaller charities that lack the internal capacity to do so directly. These partnerships can dramatically reduce the operational burden and risk of accepting illiquid or complex gifts.

The Role of Advisors– and a Missing Conversation

There is another dimension to this that deserves attention, particularly for the professional advisors who work with donors and families.

Donor surveys consistently reveal a gap between what advisors believe they are doing and what donors experience. Fidelity Charitable’s “Overcoming Barriers to Giving” study found that roughly two-thirds of itemizing donors would like to give more, with many citing liquidity constraints and lack of awareness of noncash giving options as barriers. Other studies find that a large majority of financial and legal advisors report discussing philanthropy with clients, while a much smaller fraction of donors say their advisors initiated those conversations. The charitable conversation is often absent from wealth management precisely where it could be most powerful: during the planning and disposition of noncash assets.

This gap is not, for the most part, a failure of intention. It is a failure of infrastructure and training. Most financial advisors are compensated based on assets under management. Suggesting that a client donate a large appreciated position is not naturally aligned with that incentive structure. Estate attorneys may be unfamiliar with the range of charitable vehicles available, or may default to the simplest option– a cash bequest– rather than exploring structures that could accomplish more for both the donor and the charity.

Programs like the Chartered Advisor in Philanthropy (CAP®) designation, offered through The American College of Financial Services, are designed to bridge this gap by building a shared language and planning framework across disciplines. But the broader point is simpler: when advisors, nonprofits, and donors are able to have genuine, informed conversations about charitable purpose and asset strategy together, the results tend to be dramatically better than when any one of those parties is working in isolation.

James’s research underscores this. In his analysis of Form 990 data, each additional dollar of fundraising expenditure was associated with approximately six dollars in additional contributions the following year. For external fundraising consulting specifically, the return was approximately twenty-seven dollars per dollar spent. James’s own commentary on these figures is worth noting: such high returns typically reflect systematic underinvestment. “If you’re getting a 27X return,” he writes, “then you should be investing more.”

The implication is clear. Most nonprofits are not only fundraising from the wrong side of the balance sheet– they are underinvesting in the capacity to do anything about it.

The Demographic Moment

All of this unfolds against a demographic backdrop that makes the case even more urgent.

Cerulli Associates projects $124 trillion in total U.S. wealth transfers through 2048, with approximately $100 trillion flowing from baby boomers and the silent generation. Of this, an estimated $18 trillion is projected to go to charities. Baby boomers currently control roughly $85 trillion– about half of all U.S. household wealth– and the transfer is already underway, with approximately $1 trillion changing hands annually.

As boomers move from earning income to living off retirement assets, the pool of disposable cash available for annual giving will contract for the generation that currently dominates philanthropy. At the same time, the noncash assets that make up the vast majority of their wealth– real estate, securities, business interests, retirement accounts– will become increasingly available for charitable disposition, either during lifetime or at death.

Organizations that have built the infrastructure to receive and steward these gifts will be positioned to benefit. Those that have not will watch the largest wealth transfer in history flow to institutions– colleges, universities, hospitals– that have been running sophisticated planned-giving and noncash-gift programs for decades.

The window is open. But it will not stay open forever.

Beginning with Purpose

It would be easy to read all of this and conclude that the answer is simply operational: update your gift acceptance policy, open a brokerage account, train your team on stock transfers. These steps matter, and organizations should take them.

But the deeper opportunity is relational.

When someone on your team asks a donor about their balance sheet rather than their checkbook, the conversation changes. It becomes less transactional and more collaborative. It opens space for the donor to think about their giving not as an expense to be managed but as an expression of values to be explored. It invites the donor into a relationship with the organization that is grounded in their full capacity to contribute, not just the portion that shows up in their monthly cash flow.

I have watched this shift happen in real time. A retired couple, long-time annual donors who had never given more than a few hundred dollars, learned that they could direct a distribution from a retirement account to an organization they had supported for years. The gift was many times larger than anything they had given before– and they described it not as a sacrifice but as a relief. They had wanted to do something meaningful. They just hadn’t known it was possible. What changed was not their generosity. It was the conversation.

This is, ultimately, a question of purpose. Why does someone give? Not because a direct mail piece arrived at the right moment. Not because a gala table needed filling. People give because something matters to them– a community, a cause, a relationship, a vision of how the world could be different. When we help donors connect their deepest commitments to the full range of resources available to them, we are not just raising more money. We are honoring what brought them to us in the first place.

The noncash giving opportunity is real, it is large, and it is underutilized. The data are clear on this. But the most important thing the data tell us is not about tax efficiency or asset allocation. It is that most of us– nonprofits, donors, and advisors alike– have been having a smaller conversation than the one that is available to us.

The ocean is right there. We have been standing in the kiddie pool.

The Noncash Giving Opportunity