Accepting Illiquid Assets: The Devil is in the Details

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I was delighted to join the Partnership for Philanthropic Planning of Tampa Bay today for a program on accepting illiquid assets. My fellow panelists were Frank J. ‘Sandy’ Rief, III, a shareholder with Allen Dell Attorneys at Law, and Deborah McCarthy, CFO, Boys & Girls Clubs of Tampa Bay. Beverley McLain, Senior Vice President of Philanthropic Services, Community Foundation of Tampa Bay expertly facilitated the program.

As promised, here are the links to the resources that were mentioned during the program. If you weren’t able to join us, never fear – these resources can be useful to all nonprofits and donors. 

Let me start by covering a few questions that were discussed:

‘What’s an illiquid asset?’ An illiquid (or non-cash) asset is anything that can not easily be sold or exchanged for cash. Be careful that you don’t interpret ‘can not easily’ for ‘can’t ever.’ Illiquid assets can be sold, just not as easily as an asset like stocks. I would simplify the definition to something you can’t deposit in your bank account or a brokerage account. These items include artwork, real estate, and jewelry.

‘Should I care about this at all?’ I think you should if you are raising support for a nonprofit organization. There are many opportunities to accept illiquid assets but you have to be well informed. For instance, a donor could give your organization a building that becomes your permanent location. There are substantial tax benefits for the donor and your organization receives a valuable asset.

‘Is there any risk for my organization?’ Absolutely! That’s why you need to do your homework before accepting any non cash gifts. Several examples were cited of organizations that accepted non cash gifts that have eventually cost the organization more than the value of the gift. The first step in protecting your organization from unnecessary risk is to create gift acceptance policies.

‘How does my organization proceed?’ Carefully and armed with plenty of resources! Here you go:

Resources

Gifts of Non-Cash Assets
Community Foundation of Tampa Bay – Specific Property Gifts

Gift Acceptance Policies
Association of Fundraising Professionals (AFP) – Sample Gift Acceptance Policies
Partnership for Philanthropic Planning (PPP) – Model Documents
BoardSource – Nonprofit Policy Sampler
Kathryn Miree and Associates – Sample Gift Acceptance Policies

IRS Forms and Publications
Publication 526 – Charitable Contributions
Publication 561 – Determining the Value of Donated Property
Form 8283 – Noncash Charitable Contributions
Form 8282 – Donee Information Return

Ethics
AFP Code of Ethical Principles and Standards
The Donor Bill of Rights

One of the most important takeaways from today’s session: know when to ask for help. I am not qualified to give tax or estate planning advice. But I do know when to call the experts.

Where There’s a Will

I made my YouTube debut this week with an appearance on The Philanthropy Show. Beverley McLain from the Community Foundation of Tampa Bay and I join host Louanne Walters to talk about planned giving. Louanne opens with the question posed by many nonprofit leaders: “When can we start brining in some planned giving?” The answer: right now. Here are a three highlights from our discussion that are helpful for your nonprofit:

  1. You don’t have to be an expert to get started – many nonprofit employees and volunteers don’t talk about planned giving because they know they aren’t experts. Don’t let that stop you. You need to be an expert on your organization then turn to professional advisors for help with the legal parts.
  2. Listen – as with all parts of fundraising, it’s better to listen than to talk. Conversations with donors are what lead to planned gifts. If you are doing all of the talking, you will miss the opportunities to deepen a relationship with your organization through a planned gift.
  3. Create a legacy society – Beverley has some priceless tips on getting this started in your organization. Be sure to start by asking who has already named your organization in their estate plans. You’ll be pleasantly surprised.

As I say in the show, “I’m no planned giving expert.” But 25 years of fundraising experience has allowed me to be a part of raising planned gifts. Don’t be afraid to get started. Be sure to subscribe to The Philanthropy Show so you will know when new episodes are posted. Even the commercials are helpful. This one is from Jennifer Dodd, Education Manager at the Nonprofit Leadership Center. She’s got great tips on blogging.