Why Wealth Giving Outperforms Cash Giving and How to Get Your Major Donors to Give That Way

If your organization wants major donor growth, the data points to one move above all others: getting donors to give from wealth instead of disposable income.

The research isn't close. Nonprofits that receive noncash gifts grow 5 to 6 times faster than those that rely only on cash. Here's why that gap exists, and how to actually get your major donors to close it.

The Research Behind Wealth Giving and Major Donor Growth

Dr. Russell James, a professor at Texas Tech University, analyzed IRS data from more than one million tax returns across over 250,000 nonprofits over a five-year period. His conclusion: gifts of noncash assets are strongly correlated to future contribution growth, and nonprofits reporting any noncash gifts grow 5 to 6 times faster than organizations reporting cash gifts alone.

The explanation comes down to where donors store their funds. Only about 3% of a typical major donor's assets sit in a checking account, the account that pays the mortgage, the car payment, and the grocery bill. The other 97% is wealth: investment accounts, retirement funds, appreciated stock, assets set aside for the future rather than the next bill cycle. 

When your fundraising strategy only asks for cash – which is what happens if you just rely on your donation transaction page to collect credit card donations –  you're competing with every other bill a donor has that month. 

When you guide a donor toward wealth giving from wealth, you're no longer competing with their monthly budget at all. You’ll have an easier time inspiring generosity when it’s not anchored in the monthly budget. 

Source: Professor Russell James of Texas Tech University’s Cash is Not King presentation on his research. Brilliant!

How to Actually Get Major Donors to Give This Way

Getting your donor to change their giving behavior is hard, because humans like routine and are creatures of habit. However, you’re in luck. Wealth giving and tax-smart giving, are two sides of the same coin. So if you can guide your donors toward tax-smart giving options, they will inevitably start giving from wealth. All tax-efficient options compared to credit card giving involve giving from wealth – donor-advised fund gifts, gifts of appreciated securities, and qualified charitable distributions.

If it were that easy, though, donors would be giving from wealth already. That’s why the nonprofit fundraising professional needs to play an important role in helping to change donor giving habits. You can inspire people to have conversations they should have had with their advisors a long time ago. 

Humans are more willing to shift their behavior during periods of change – it can be when they have a new baby, get married, have a major medical issue, or when the tax code changes. That’s right: when the tax code changes and might negatively impact them, individuals are open to seeking new solutions to this new problem they now have.

You can first emphasize that the tax code has changed, and that you want to help your donors through it. You can also emphasize what donors might stand to lose if they don’t act. You can also tell your donor that other donors, like them, are already starting to give in tax-smart ways. You’re using proven behavioral economic concepts to guide your donors towards making better decisions, including two concepts called loss aversion and social proof.

One Big Beautiful Bill Act (OBBBA) Just Changed the Tax Code. How It Impacts Charitable Giving 

Curious how the One Big Beautiful Bill Act (OBBBA) affected the tax deductibility of charitable giving?

Donors who itemize their deductions, starting in 2026, can no longer deduct the first 0.5% of their adjusted gross income (AGI) given to charity each year. For a household earning $400,000, that's the first $2,000 of charitable giving, every single year, that no longer carries a tax benefit.

Think of this 0.5% AGI as a Generosity Minimum. This couple above has to donate at least $2,000 based on their income level in order for their charitable tax deduction to start kicking in. If they donated $2,025 annually, then $25 would be tax-deductible. (The IRS refers to it as a ‘floor,’ but I think my term is easier to visualize.) 

Donors who take the standard deduction, starting in 2026, now have access to a modest tax deduction for their charitable contributions. It is $1,000 for single filers, and $2,000 for married filing jointly filers in cash donations. This is wonderful news for these donors and for your nonprofit. However, most of your major donors are likely to be in the first group, itemizing their deductions and getting the raw end of the deal. 

Even the Indiana University Lilly Family School of Philanthropy estimates that the One Big Beautiful Bill Act will lower charitable giving by about $5.69 billion per year because the tax benefit given to standard deduction filers will be swamped by the tax benefit loss given to itemizers. Of course, that conclusion assumes that fundraising professionals keep doing our jobs the way we always have. 

Sending Your Donor in the Right Direction with Good Questions for Tax Advisor

You definitely should not be providing tax advice to your donors. However, knowing the research going into the conversation, will give you confidence to send your donor in the right direction with good questions for their tax advisor. 

And above all, just getting your donor to ask, “Can you recommend the most tax-efficient way for me to give charitably?” of their advisor, will produce astounding results. 

Here are the most likely strategies an advisor will recommend to your donors. 

Bunching Donor-Advised Funds: Not Just for the Wealth

DAFs used to carry a reputation as a tool for the ultra-wealthy. That's no longer accurate. You can open one today with some providers for as little as $36 a year and no minimum deposit required. In 2024, donors gave $64.89 billion to charities through DAFs, a 19% increase over the prior year, through more than 1,500 providers nationwide. This is a mainstream giving vehicle now, not a niche one.

DAFs are a tax-smart way to give, and OBBBA makes it more so using a bunching strategy. A donor with a $400,000 AGI, who donates $2,500 a year in cash annually, over four years, claims $2,000 in total deductions, since only the first $500 each year falls below the AGI floor. The same donor who instead bunches $10,000 into a DAF in a single year, claims $8,000 in deductions, taking the 0.5% hit only once, instead of four times. Same total gift, four times the deduction.

Qualified Charitable Distributions: The Most Tax-Efficient Gift for Donors 70½ and Older

A qualified charitable distribution lets donors 70½ and up, give directly from a traditional IRA. It is the single most tax-efficient way to give if your donor qualifies. When your donor is required to make a Required Minimum Distribution from their IRA at age 73, they can donate these funds and avoid paying income tax on the distribution. It sidesteps the 0.5% floor entirely and it applies whether donors itemize their taxes or take the standard deduction. In 2026, the limit is $111,000 per person, or $222,000 per couple. If you have a donor roll full of baby boomers, this is where your biggest untapped growth exists.

Appreciated Securities: A Simple Way to Avoid the Capital Gains Hit

For donors already holding stock, mutual funds, or other securities that have gone up in value, giving the security directly instead of selling it and donating cash, lets them avoid the capital gains tax on that appreciation. And if they bought that security at $100 and it’s now worth $1,000, well, they only had to put $100 to work to hand you a $1,000 gift. Can’t do that with a credit card donation. 

Here is how to Prompt Your Donor to Post Tax-Smart Questions to their Advisor

As a nonprofit fundraiser, you're not pitching a financial strategy. You're opening a door: “I'm no tax expert, but we're starting to see donors give in more tax-smart ways this year. Might be worth asking your financial or tax advisor about it.” That single sentence is the first step in a rich fundraising growth strategy. It signals you're looking out for the donor, not just your revenue goal, and it gives them a specific, easy next step.

The moment a donor's question goes beyond the basics, point them to their advisor. You’re not a tax advisor, but you don’t need to be one in order to guide them towards seeking out better answers for themselves from their experts. You need to know enough to start the conversation.

Major donor growth is about interacting with your major donors in a different way than you may have done in the past. By motivating your donor to give more tax efficiently, you’ll inevitably lead them to give from wealth. That shift, from disposable income to wealth, is the entire premise behind the Generosity Guide Framework™ that we have developed at Donor Boom to help you achieve outsized major gift growth. 

To learn more about how you can 5x your major gifts, please sign up for a Discovery Call.