5 Types of Donations for Nonprofits and Charities

How thrilled are you when you drop a dollar or two into the Christmas kettle? Maybe you’ll even write a check to your favorite charity! If you have time, you may end up volunteering for a charity organization or event. We know, whatever the reason and however the type, you feel good about it.

A study has found that the act of giving activates the region of the brain associated with pleasure and trust. Also, individuals now itemize charitable giving as a tax deduction. But then, philanthropic giving far exceeds the tax benefits and is usually done because it is something that is close to your heart.    

Even though you easily recognize giving in cash and kind or volunteering as the types of donations, there are many ways of giving. In this blog, let us look at the five types of donations for nonprofits and charities. 

1. Cash donation

It won’t be wrong to say that cash donations are a highly valuable form of support for nonprofits and charitable organizations. There’s a strong reason to say so. Cash donations provide immediate financial resources that enable nonprofits to carry out their work and make a positive impact.

When we mean cash donations, it isn’t just limited to physical currency. Cash donations include donations made by check or through electronic means such as credit or debit cards, online transfers. The term “cash donation” is often used in a broader sense to encompass various forms of monetary contributions that can be readily converted into cash for the nonprofit’s use.    

But how can charities benefit from cash donations? Let’s find it out here. 

Immediate impact

Cash donations provide immediate assistance to nonprofits. They provide the flexibility for organizations to allocate funds where they are needed the most, whether it is for emergency relief efforts, program development, or other critical areas. 

Versatile use

With cash, nonprofits have the discretion to allocate funds to specific programs that align with their mission and have the most significant impact. This flexibility allows them to adapt and make strategic decisions based on their community’s needs.

Administrative efficiency

Cash donations are generally straightforward to process, reducing the administrative burden for charities. They require minimal handling and can be easily deposited into the organization's bank account. This efficiency enables the charity's programs and services to receive a greater portion of the donated funds, as it minimizes consumption by administrative overhead. 

2. Stocks and securities

Donating your stocks and securities to nonprofits comes under donations in-kind as they involve the contribution of non-cash assets rather than monetary funds. An advantage of donating stocks and securities is that their value may appreciate over time, allowing nonprofits to benefit from the full value of the investment. Let’s see how nonprofits and organizations can benefit from stock and securities donations. 

Increased impact

If used appropriately, stocks and securities can have a greater impact on nonprofits. Through these donations, nonprofits can keep them for the long term and liquidate the assets only when required, allowing their value to maximize and generate higher value over time. This results in greater support for the organization’s programs and initiatives. 

Simplified donations

Even though donating securities and stocks isn’t as straightforward as donating cash, many nonprofits have mechanisms in place to facilitate the donation. They provide you with guidance on the process, including the paperwork and transfer instructions. You can also talk to your financial advisor or broker to help you transfer the assets to the organizations and mark them for causes of your choice.  

Potential tax advantages

In many countries, including the United States, donations of appreciated stocks held for more than a year may be eligible for a tax deduction based on the fair market value of the donated assets. This has the potential to reduce your taxable income. Many countries have different applicable rules for tax deductions, and it is always better to consult your financial advisor to know about your tax liabilities when donating stocks and securities to nonprofits. 

Portfolio management

Another indirect benefit of donating stocks and securities is rebalancing your portfolio. It is a strategic way to reduce your exposure to a particular investment while supporting a cause you care about. 

3. Personal property and inventory

Not all donations take the form of cash or volunteering. There are other ways to donate, and one of them is in the form of personal property and inventory. What types of donations fall into this category? Donations in the form of personal property and inventory refer to giving non-cash items such as artwork, collectibles, vehicles, equipment, or inventory to charitable organizations. 

There are different types of personal property donations, including tangible items and intellectual property rights.

Tangible Personal Property

Donating physical items like artwork, jewelry, vehicles, or equipment to charities.

Intellectual Property

Donating copyrights, patents, or trademarks to support nonprofit organizations.

Inventory Donations

Donating excess or unsold inventory from businesses to charitable organizations.

How does it help the donor and the nonprofit when donations are in the form of personal property and inventory? Let’s shed some light on it here. 

Supporting causes

By donating personal property and inventory, you can support charitable organizations and causes you care about, making a positive impact in the community.

Simplifying asset management

Donating personal property and inventory can help you declutter, streamline your possessions, and simplify asset management.

Tax deductions

You may be eligible for tax deductions based on the fair market value of the donated items, which can help reduce your taxable income.

Avoid capital gains tax

If the donated property has appreciated in value, donating it can help avoid capital gains taxes that would have been incurred if the item had been sold.

Now, you may wonder how this type of donation benefits a nonprofit. What do they do with the inventory or artwork?

Fundraising

Nonprofits can auction or sell donated artwork, collectibles, or other valuable items to raise funds for their programs and initiatives.

Program support

Nonprofits may directly use donated inventory, such as supplies or equipment, to support their operations, programs, or services.

Distribution

Nonprofits can distribute donated inventory, such as clothing or food, directly to those in need or use it in their community outreach efforts.

Cost savings

By receiving donated personal property and inventory, nonprofits can reduce their expenses on purchasing items, allowing them to allocate more resources toward their mission.

Nonprofits typically have processes in place to assess the value, authenticity, and condition of donated items. They work with appraisers to determine the fair market value of the items before selling them at auctions or events. Also, they have policies and guidelines for accepting and utilizing donated inventory to ensure it aligns with their mission and meets their specific needs. 

4. Real estate

Donations in the form of real estate are also a powerful way to support causes. Individuals donate real estate to charities for various reasons. Personal motivations, philanthropic goals, and a desire to make a positive impact are the driving factors. There are various types of real estate donations that can be made to charities.

Residential property

This includes houses, apartments, vacation homes, or condominiums that can be used for charitable purposes, sold to generate funds for the organization, or even provide housing for individuals in need.

Commercial property

This refers to office buildings, retail spaces, warehouses, or any other type of commercial real estate. Charities can use these properties for their own operations, lease them to generate income or sell them to fund their programs.

Land

This includes donating undeveloped land or vacant plots that are beneficial for organizations involved in conservation efforts, community development projects, or those seeking to expand their operations in the future.   

Let’s see how real estate donations can help you make a lasting impact and benefit the nonprofit. 

Philanthropic support

By gifting property, you support causes and organizations you believe in, contributing to education, healthcare, poverty alleviation, environmental conservation, and community development.

Simplifying real estate planning

Real estate donations simplify estate planning and leave a lasting legacy while reducing the tax burdens and complexities associated with transferring real estate assets to heirs.

Tax advantages

Real estate donations offer tax benefits through charitable deductions and capital gains tax avoidance.

But, we recommend you consult with experts in charitable giving to maximize the impact of your real estate donation and ensure compliance with regulations.

5. Volunteering

Volunteering is the process by which you contribute your time, skills, and energy to a cause you care about. While it is closely related to donations, volunteering is not exactly a type of donation. We’ll tell you why. 

Donations typically involve providing financial assistance or material resources to a charity or nonprofit. These contributions help fund causes, services, or projects. On the other hand, volunteering involves actively participating in the organization's activities by offering your time, expertise, and effort. It's a hands-on approach where you directly engage with the cause and work alongside the organization's staff or fellow volunteers. 

Volunteering allows you to make a personal impact by directly interacting with the community or individuals the charity serves. You might assist with events, participate in fundraising campaigns, provide support for administrative tasks, or even contribute your specific skills, such as teaching, mentoring, or providing professional services.

Now, are donations worthwhile and valued, while volunteering isn’t? No, both donations and volunteering are essential and valuable ways to support charitable organizations. Donations provide financial stability and resources, while volunteering adds a human touch. It brings compassion, commitment, and personal involvement to the cause. 

GivingX- The all-in-one custom fundraising software to collect donations

Now that you know the types of donations, let’s go through the details of setting up an online donation form or landing page to help make your causes visible to potential donors. Here, you can take advantage of the fundraising software, GivingX. 

This tool has many features to help you create an online donation page or custom form. 

• Access free unlimited integrations through Zapier. 
• Set up 125+ secured payment gateways, allowing flexibility for individuals to donate.
• Use the automatic language translation tool to convert the content into the language your potential donors speak. 
• Increase recurring donations by providing the monthly giving option on the donation form. 
• Use the fundraising goal tracker to encourage donors to donate more.
• Utilize the features of donor management CRM to manage and grow your donor base.
• Benefit from GivingX’s features & pricing with just 1.45% as the platform fee. 

With the custom fundraising software GivingX, nonprofits can easily build a fundraising landing page or embeddable custom form to seek donations from potential donors. Try it and see your fundraiser succeed.

Wrapping Up

We hope we have made you familiar with the types of donations and how nonprofits can build a fundraising landing page or custom form on GivingX. Whatever donations you intend to give to a cause you support, remember that your intentions and love matter. Donate in cash or kind and volunteer for the cause you support - your one act of kindness means the world to the nonprofits or organizations that are striving to make the world a better place. Donate to show you care.