Finding Hidden Treasure through Asset-Based Giving

It happens in nonprofits and ministries of every stripe: Too many times, we underestimate the capacity and goodwill of our donors. To find the hidden treasure in and for our donors, we must change our perception of who are donors are and what they want to accomplish.

Recently, I made a call to a gentleman who’d asked for follow up after a seminar I gave at a small church. The voice on the other end had a drawl so thick, I could barely understand him.

Through an awkwardly comical series of my asking him to repeat himself, I made out that he was a farmer. A widower, no children. He was a sweet, gentle guy who clearly loved the Lord.

But I couldn’t understand why he wanted me to talk with him. A real communication failure. So I asked, “Do you have some specific questions based on the webinar a couple weeks ago?”

“No, I don’t think so. But my pastor thought I should talk to you. Because he thought I could sell the farm, and then keep farming, and give money.”

Confused, I still couldn’t make out exactly what he wanted to do or how to help him. I thought, he’s just a nice guy with about 30 acres of land resulting in about a $100,000 of total net worth and wants to give it to the church when he dies. I was about to end the call with a few quick words of advice.

Thankfully, we kept talking. Eventually, it came out that this farmer had 230 acres of land worth $20,000 an acre, and a developer is asking to buy 80 of the 230 acres from him.

That’s a $1.6 million deal.

I finally understood! The farmer had no idea what the capital gains taxes from the sale would be. He wanted to give the proceeds of the sale to the church when he dies, but he wanted to continue farming until he couldn’t do so anymore. He would then need regular income to sustain him.

To find the hidden treasure for our donors, we must change our perception of who are donors are and what they want to accomplish. Share on X

We helped him set up a Charitable Remainder Trust which would provide him a steady income until his passing, at which time, the church would receive the large gift from the sale of the land. In this way, he was able to continue farming on the remaining 150 acres of land and avoid the massive capital gains tax from the sale.

For both the farmer and the small church, it was like finding hidden treasure.

Finding Hidden Treasure for Donors

This farmer with an unintelligible account from a small church in a rural county had an enormous capacity to give — but you wouldn’t know it by looking on the outside.

Despite his significant resources, this man probably lives on $30 to $50 thousand per year.
Humble. Simple. But wealthy.

There was so much latent potential within this humble man. Thankfully, that potential was able to be realized.

Too many times, we underestimate the capacity and goodwill of our donors. Share on X

By tapping into the latent potential of this man’s giving through an asset-based gift, there were profound impacts on his retirement. But then, there was also a tremendous impact on the Kingdom of God through his gift to the church.

Unfortunately, for many donors, nonprofits, and churches, the latent potential for transformational giving within donor assets is often missed altogether.

Hidden Treasure in Retirement Accounts

There is somewhere north of $22 trillion sitting in IRA’s and 401k’s across America—latent potential for good. But there’s also latent potential to save donors thousands of dollars!

Nine out of 10 people that I talk to are unaware of the taxation on their IRA or 401K when they die. These donors have never heard of it, and yet for most of them, it’s going to be the largest tax bill of their life.

For example, the average American with an IRA of $200,000 can pay up to $30,000 or $40,000 in taxes when they die. For a middle-class couple with a combined income of $60,000 or $80,000 per year, that’s a ridiculous, astounding, unbelievable amount of tax.

On the other hand, being able to give a $200,000 gift to charity is equally unimaginable for many middle-class Americans.

It’s an “Aha! Moment” for most people to discover that they could give everything else—their house, life insurance, investments, everything—to their children tax-free by just giving their IRA to ministry.

This is hidden treasure uncovered for your donors through asset-based giving. And of course, it’s a hidden treasure uncovered for your organization.

Hidden Treasure in Business Sales

VIP Forum estimates that 82 percent of baby boomers that have a family business will sell that business as they approach retirement rather than pass it to the next generation.

When they sell the business they started in their garage and scaled it to a million, 10 million or 100 million dollar operation, they’re going to encounter an astoundingly high tax bill. The taxes on these sales are significant.

But what if they could cut those taxes and instead, direct the money to go to the charity they care about?

In our consultations with donors, we routinely show them how they can reduce those taxes by 50 to 80 percent. In fact, sometimes they can eliminate them all together in favor of the charities they care about, making the capital gains tax a voluntary tax.

Baby Boomers who are selling their businesses, and those with currently “untaxed” retirement accounts, can give that money to the government because they just weren’t paying attention or do so out of ignorance.

But if you show them how they can elect to (oftentimes) increase their retirement income, provide generously for their heirs, and disinherit the government in favor of their favorite charities, you will be helping them find hidden treasure for themselves and your organization.

If you would like to know more about finding hidden treasure for your donors by discussing asset-based giving options with them, let’s talk!