Scarcity, the Enemy of Philanthropy

by Andy Ragone, CGPP

Tom

My meeting with Tom began the way many donor meetings do. Grabbing a Coffee while sitting at a small table in the side patio. Engaging in small talk with a few stories about grandchildren and retirement. Then, segueing to a conversation relating to the organization.

Which, in this case, of course, caused some hesitation.

Tom had spent more than forty years building a successful electrical contracting business. To secure his retirement, he had sold it a couple of years ago and has since worked as a part-time consultant to the new owners who bought it from him. He paid off his mortgage in full and held additional investments. By almost every reasonable definition, he and his wife Linda were wealthy. Yet when the conversation turned toward charitable giving, his posture changed.

“We would love to do more,” he said, “but… we have to be careful now.”

Fundraisers hear versions of that sentence every day, often from people with significant assets, people like Tom. So, what made Tom so hesitant? Tom’s issue probably wasn’t generosity. More likely, Tom was fearful about making a gift that could negatively affect his cash flow and the lifestyle that he and Linda had come to enjoy.

That underlying fear has shaped philanthropy across America.

A Gift from Disposable Income Is a Gift From Scarcity

When donors give primarily from disposable income, every charitable gift can feel connected to sacrifice. A check written to charity competes psychologically against travel plans, healthcare costs, inflation, market uncertainty, and the routines that retirees come to enjoy. Even generous people begin to feel financially vulnerable when giving consistently reduces the same monthly income they depend upon to maintain their lifestyle.

As a result, many donors unconsciously conclude that they are not wealthy enough to make transformational gifts.

The tragedy is that their conclusion is often wrong.

Most wealth in America does not exist in cash flow. Only 2.3% of American wealth is held in cash or cash equivalent accounts. Real wealth exists in noncash assets: appreciated stock, real estate, retirement accounts, businesses, land, and investment portfolios accumulated over decades. Research consistently shows that nearly all household wealth is held in assets rather than in disposable income, yet charitable-giving conversations still revolve almost entirely around cash.

That creates a distorted understanding of wealth.

A retired couple may possess several million dollars in appreciated assets while still feeling anxious about making a larger charitable gift because they evaluate generosity entirely through the lens of monthly income. When donors define wealth solely by income, they almost always underestimate their actual financial capacity.

Tom and Linda had lived inside that mindset for years. They faithfully supported several organizations through modest annual gifts and event attendance, but every conversation about increasing support created tension. Linda was worried about healthcare costs and the rising cost of living overall. Tom worried about protecting the income stability they had spent decades building. Generosity felt emotionally expensive because every gift appeared to come directly from limited retirement income.

Shifting the Conversation

I had my work cut out for me. How could I help Tom begin to see how wealthy he really is? I had to put on my philanthropic advisor hat.

So I said, “Tom, you have done a great job preparing for your retirement. Congratulations on that! More importantly, you have been one of our best donors over the years. I’m so appreciative that you and Linda have aligned yourselves with the work we’re doing here.”

After discovering why our organization was so important to them, I shared. “Many of our committed donors prefer to give from their stock or IRA accounts instead of their bank accounts. They do this because they see how their tax dollars are redirected away from the IRS and to our organization using IRS-approved charitable strategies. I’m curious… how have you normally chosen to give?”

The conversation shifted.

It turns out that over the course of four decades, Tom and Linda had accumulated substantial appreciated stock. Tom stayed away from selling those assets, knowing that doing so would trigger large capital gains taxes. A meaningful portion of their wealth would be lost to the IRS.

So, I explained to Tom that giving directly from his stock account, rather than cash, would benefit in two ways rather than one. I also explained how Tom could take the cash he normally gives and reinvest it by buying the very same stock he just gave away. By doing that, he could later sell the stock with a basis newly reset to its current market value, rather than what he paid for it years ago. This would significantly reduce any future capital gains taxes should he wish to sell the stock down the road.

Once he understood how he could transfer appreciated public stock directly to our nonprofit and receive both an income tax deduction while bypassing capital gains altogether, his perspective changed.

Giving from Abundance and Perceived Wealth

The difference was significant.

After our conversation, Tom and Linda increased their giving dramatically without creating the same emotional anxiety. Why? Because the gift no longer felt tied to monthly financial survival. Their lifestyle remained intact while their generosity expanded. Their giving increased by a multiplier of three.

That distinction matters more than many nonprofits realize. The same donors are now giving three times as much as they did previously. Three… Times.

Donors rarely resist generosity itself. No. What they resist is the perception that generosity threatens their current lifestyle. When giving feels connected to financial erosion, limited disposable income, people naturally pull back. When giving becomes aligned with wise stewardship and tax-efficient planning, generosity often grows.

This is one of the most overlooked truths in fundraising: donors give more freely when generosity no longer competes against lifestyle preservation. Scarcity suppresses giving because people instinctively protect stability. Abundance expands generosity because donors begin seeing wealth through the broader lens of accumulated assets rather than limited income alone.

That is why asset-based philanthropy matters so deeply.

It helps donors understand where their true wealth actually resides. It reveals opportunities to give in ways that are often more tax-efficient, more meaningful, and more impactful than cash-only giving. Most importantly, it frees generosity from the psychological burden of feeling financially reckless.

The future of philanthropy depends in large part on helping donors make that transition.

Because once donors stop asking, “What can we spare from income?” and begin asking, “What resources have been entrusted to us?” their vision changes. Their confidence changes. Their generosity changes.

And very often, so does the future of the organizations they love.