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Tips for Non-Cash Donations to Your Organization

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The average American has 9% of their net worth in cash. The other 91% is in non-cash assets. Yet 99% of all the efforts in cultivating charitable giving are chasing the 9%. This reality limits the potential of a nonprofit organization, higher education institution, or charity to achieve its mission and it robs the donor of the opportunity to have the greatest impact through their philanthropy.

Before we explore my best tips for non-cash donations to your organization, let’s look at a common scenario: A donor receives a paycheck, pays taxes on the earnings, deposits the proceeds in their checking account, writes a check to charity, and receives a partial deduction for their gift.

This happens thousands of times a day.

On the other hand, consider a donor who has a piece of land that they have decided to sell. It has appreciated in value since they bought it 20 years ago. If the donor sells the land, they will pay capital gains taxes on the appreciated value. But if this donor gifts the land to their favorite charity, foundation, or school, they eliminate all capital gains taxes and they still get a deduction. It’s a double benefit to the donor and transformational for the organization.

In this post, we’ll explore these three foundational tips for non-cash donations:

  1. Expect asset-based gifts to come your way.  
  2. Make a plan to ask about them in the right way with the appropriate supporter.
  3. Know how to manage asset-based gifts.

We Tend to Make Assumptions About Non-Cash Donations

I have learned over the years that there are two main obstacles to implementing an asset-based giving strategy: charity intimidation and lack of donor knowledge. Nonprofit organizations don’t expect these asset gifts, don’t know how or when to ask for them, and are often unsure of what to do if one comes their way.

This is shortsighted. According to Giving USA, bequests account for more charitable giving than corporate donations and a considerable portion of those bequests are non-cash assets such as real estate, art, cars, and stocks.

Charities, higher ed institutions, and nonprofits, as well as their donors, often assume that every successful businessperson with many advisors would already know about this opportunity. Or they assume average supporters of your organization would not have the means to make non-cash gifts. Neither is true.

Do You Know What They Don’t Know About Asset-Based Gifts?

Not long ago, I worked with a donor who had a large commercial real estate opportunity. He owned an office building and land and had been offered a substantial amount to sell it. This was a very sophisticated entrepreneur. We showed him several options for his “pre-sale” planning. He was stunned at the amount he could save in taxes by donating the properties.

We met with his CPA, his financial advisor, and his lawyers. All of them applauded the plan of action but explained that none of their responsibilities focused on charitable planning to reduce or eliminate tax liability. For this entrepreneur, this was a true “aha” moment.

“I thought I had all the advisors I needed,” he wrote to me later. “But now I understand.”

The most experienced financial counselor may not have the expertise in planned giving to help a donor make a gift that benefits both the organization and the donor come tax time. Anyone can make a non-cash gift and any nonprofit organization can accept a non-cash asset, but sometimes it helps to add a “philanthropy architect” to your advisory list to guide you.

Do You Assume Your Donors Already Know About Planned Giving?

So, what do we do about the dilemma of believing everyone already knows about planning? Well, we could all keep doing what we have always done, expecting different results (we all know what that means). Or we could strike out in a new direction by following these three essential tips:

  1. Every organization should expect asset-based gifts. Public stocks, real estate, commodities, and private businesses could all be potential non-cash donations. Consider them with a spirit of expectation. It can lead to results. Plus, it’s just smart planning to include non-cash revenue sources for a stronger financial foundation and long-term sustainability for your mission.
  2. Every organization should know how and when to ask about planned giving. Do you encourage your donors to consider non-cash gifts? Do you invite donors to include your organization in their will and trusts? These are fundamentals that you and your team should be contemplating.
  3. Every organization should make a plan before the first non-cash gift arrives. Do you have a gift acceptance policy? Do you have a partner who can help you through the complexities of receiving an asset gift?

Do You Have the Wrong Idea About Who Makes Non-Cash Gifts?

If you think that asset-based giving is only for the wealthy, you would be mistaken.  Bequests are accessible to everyone. One of my favorite gifts from a few years ago was made by an 89-year-old woman who shared with me that she had always planned to leave a rental house to charity when she died.

But now, she was distraught. Trying to keep up with the house was exhausting and finding good renters was a major effort. If she sold the house, though, she would have to pay a bunch of taxes.

“What if you gave it to charity while you are alive?” I asked her. “You could see the impact you’ve made, and the charity could properly thank you for the gift.”

She couldn’t believe that this was even possible. This wonderful woman had been a consistent but modest $1,000-per-year donor to this charity for years and now she was going to give them a house. We helped her move the house into a Donor Advised Fund, it was sold, and she was able to make a $250,000 gift to charity. She was so excited, and the nonprofit organization was blessed by her generosity. Maybe it was not the largest gift we have ever worked on, but it might have been the most fulfilling.

If you see the potential in expanding your planned giving program and in actively seeking non-cash gifts, demographic factors are working in your favor. More than 77 million Americans are 60 or older, with a high percentage of Baby Boomers in good financial position to make charitable distributions in the coming years.

How Can You Prepare to Become a Good Steward of Non-Cash Gifts?

As we saw with the donor’s gift of a house, asset gifts are typically larger and can make more of an impact than cash gifts. Charities must be prepared to articulate a vision big enough to warrant this kind of gift. Ask your team these questions:

  • If a donor had the capacity to give $10 million, would they feel comfortable that we would steward it in an appropriate way?
  • Can we articulate the impact that a transformational gift would have on our mission?

If you can say yes to these questions, you are one of the few. If you’re not sure, you join the majority of nonprofits in America that still need to develop a strategy for non-cash assets. My encouragement to you is simple: You are not stuck in your present reality. Preparing for non-cash gifts in wills, trusts, beneficiary designations, and charitable gift annuities offers your mission—and every nonprofit organization—both hope and opportunity.

Donor Advised Funds for Churches

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Last week, we talked about the rising popularity of donor advised funds—but should pastors and church leaders be pushing this as a financial tool for their people? Absolutely.

For most churches in America, giving is done in the same straightforward manner as it’s been done since the Pilgrims landed at Plymouth Rock.

Church members gather to worship. They bring cash (or checks). They place their money into a collection box, bag, or basket. And this process repeats itself 52 weeks (minus snow days) every year.

Let me be clear right up front: There’s nothing wrong with this method. Please don’t stop doing it in your church if that’s your traditional approach to discipling your congregation into generosity.

But this method does have some flaws, both theologically and practically.

Flaws in Weekly Tithe Collection

Flaw #1

When you “pass the plate,” some people might feel compelled to give, yet in Scripture we know we’re supposed to give “cheerfully.” Coerced generosity doesn’t work in God’s Kingdom.

Flaw #2

Most people do not attend all 52 Sundays—including the pastors! So when you collect the gifts from your people on Sunday morning, you will unavoidably miss potential gifts from those absent.

Flaw #3

More people are choosing to go cashless, and only carry cards. Of course, you can place giving kiosks in the building and set up your online giving processor on your website. But you still will miss people who don’t show up every Sunday—and some people are in such a hurry that they fail to visit the kiosks before or after service.

These flaws are nothing new for a pastor like you. I’m sure you’ve even had a conversation or two with your deacons or elders about how to optimize the part of the service where you receive the tithes and offerings.

And, again, these are not “deal breakers” in my mind.

Passing the plate is an honored, time-tested way to sustain the church, cultivate a spirit of generosity in your people, and worship the Lord corporately through giving.

But if I could give you a stewardship tool that would solve all of those problems—wouldn’t you jump on it?

Take a look at how donor advised funds can drive the mission of your church. Share on X

There is such a tool! Donor advised funds.

Donor Advised Funds and the Church

There’s been more and more talk about donor advised funds (DAF) in the philanthropic community lately. It’s becoming a common stewardship tool.

In fact, since 2010, the amount of money contributed to DAF’s has increased by 300%!

So you might have already heard about them. (If you need a quick primer, please see my previous blog post.) But you may not have heard that your church members and your church can benefit tremendously from using this financial stewardship tool.

Check this out! Churches have so much to gain when members use donor advised funds. Share on X

Almost every DAF provider I know of allows donors to gift the money they contribute to fund religious institutions. The rare exception might be a community foundation that restricts the grants donors can make to local or economic causes.

But there are also excellent Christian DAF providers that you can refer your people to that will help you reinforce biblical stewardship values in the lives of your people. And, of course, they will allow your congregants to give to your church through their DAF’s.

Two Christian foundations I highly recommend are:

Setting up a DAF with a Christian foundation does not limit your church member to give to only Christian causes or churches. With regard to Waterstone and National Christian Foundation, I know that as long as the charity you’re giving to is not antithetical to biblical, Christian values, they’re fine writing checks to a state university, hospital, or other causes.

This flexibility is important because while you want your church members to give faithfully to your church, you want them to have the freedom to support the other issues God has placed on their hearts.

But by promoting the use of donor advised funds among your church members, you can smooth out the peaks and valleys in your church’s cash flow because DAF’s urge donors to be proactive and intentional about their giving.

DAF’s also assist your church members in being consistent in their giving—even when they’re not in attendance every Sunday morning.

Using Donor Advised Funds as a Discipleship Tool

Another reason I encourage pastors like you to promote the use of donor advised funds is that church members can easily use them to teach their child the ways of generous living by making their children advisors to the fund. There are several ways to do this.

The first way is that you could set up a donor advised fund and appoint your children as advisors. This way, you can make decisions on where the money should be given in real time with your children.

Using a DAF, you would be providing your children practical experience in administering Kingdom finances—and you would be there personally to guide them!

The other way is to set up a DAF as a part of your estate planning to try to use that as a mentoring vehicle for your kids on helping them grow in stewardship after you die.

For example, in your estate plan, you could give your children the inheritance assets directly that you want to give them—but then also deposit $10,000 or $25,000 into a donor advised fund account and appoint your children as the advisors to that fund.

By being the advisors to the DAF your estate created after you pass on, you’ve created a way to launch your children into the practice of biblical stewardship, even when you’re not physically present with them.

Donor Advised Funds Are a Great Resource for Churches

Donor advised funds are a HUGE blessing for churches, church leaders, and church members. Don’t miss out on this easy-to-use stewardship tool!

Encourage your people in your stewardship sermons, series, or Sunday School classes to go to National Christian Foundation or Waterstone and open up a DAF. This will help you and your people match up your giving habits with your biblical convictions.

Want to discover more stewardship tools like this to fund your church’s mission? Let’s talk!