GUEST POST // 7 Non-Cash Donation Options for Capital Campaign Donors
Contributed by the team at Capital Campaign Pro
When it comes to capital campaigns, educating your donors about all the diverse and non-traditional ways that they can contribute will pay dividends, especially in the quiet phase when you’ll likely be working your way down a gift range chart, soliciting high-net-worth individuals, and raising a majority of your campaign goal.
Non-cash donations are a win-win: they offer flexible and tax-efficient giving options that can appeal to a wide range of donors and can generate a large amount of revenue for your nonprofit.
Here are several unique, non-cash donation options to consider:
1. Stocks and Securities
One of the most popular non-cash donation options is the gift of appreciated stocks or securities. This method allows donors to avoid capital gains taxes on the appreciated value of the asset and receive a tax deduction for the full market value of the stock at the time of donation.
How It Works
Valuation: The value of the gift is based on the stock's fair market value on the date of the transfer.
Process: Donors need to instruct their brokerage to transfer the stock directly to the organization’s brokerage account.
Benefits: Donors can avoid paying capital gains tax and receive a charitable deduction for the full fair market value of the stock.
Platforms such as DonateStock remove some of the burdens on the part of the charity to receive and convert the stock to cash.
2. Real Estate
Donating real estate can be an excellent option for donors with property they no longer need or wish to maintain. This can include undeveloped land or commercial buildings. If a construction project is the basis of your capital campaign, donated land or a building (even one in need of renovation) can kickstart your campaign!
How It Works
Valuation: An independent appraisal is required to determine the fair market value of the property.
Process: The property is transferred to the organization, which can then sell it and use the proceeds for the campaign.
Benefits: Donors avoid capital gains taxes and can deduct the fair market value of the property from their taxable income.
3. Cryptocurrency
With the rise of digital assets, accepting cryptocurrency donations has become more common. Bitcoin, Ethereum, and other cryptocurrencies can be donated directly to support your campaign.
How It Works
Valuation: The donation is valued at the fair market value of the cryptocurrency at the time of the donation.
Process: Donors transfer the cryptocurrency to the organization’s digital wallet.
Benefits: Similar to stocks, donors avoid capital gains taxes and receive a charitable deduction for the fair market value.
Similar to stock donations, platforms exist to streamline this process, such as The Giving Block.
4. Tangible Personal Property
In-kind donations such as fine art, antiques, jewelry, and collectibles can be valuable contributions to a capital campaign. One challenge for the nonprofit is the responsibility of liquidating the assets, but one way this can be achieved is through a silent auction at a campaign-related event.
How It Works
Valuation: A qualified appraisal is necessary to determine the fair market value.
Process: The donor transfers ownership of the item to the organization.
Benefits: Donors can claim a charitable deduction based on the fair market value if the item is related to the organization's mission.
5. Life Insurance Policies
Donors can name the organization as a beneficiary of a life insurance policy or donate a policy they no longer need.
How It Works
Valuation: The value of the donation can be the policy's cash value or the face value if the policy is paid up.
Process: The donor names the organization as the beneficiary or transfers ownership of the policy.
Benefits: Donors can receive a tax deduction for the policy’s value and may continue to pay premiums as additional charitable contributions.
6. Retirement Assets
Retirement accounts, such as IRAs or 401(k)s, can be a tax-efficient way for donors to make substantial gifts.
How It Works
Valuation: The value of the gift is the amount withdrawn from the retirement account.
Process: Donors can make a Qualified Charitable Distribution (QCD) directly to the organization.
Benefits: Donors over 70½ can transfer up to $100,000 annually from their IRA to the charity without it being counted as taxable income.
7. Donor-Advised Funds (DAFs)
Donor-Advised Funds are a popular and flexible charitable giving vehicle. Donors can contribute to a DAF and recommend grants to your capital campaign. Asking your major donors and other prospects if they have DAFs is a good way to start the conversation.
How It Works
Valuation: Contributions to a DAF are tax-deductible in the year they are made.
Process: Donors recommend grants from their DAF to your organization.
Benefits: Donors receive an immediate tax deduction and can recommend grants over time.
Incorporating Non-Cash Gifts into Your Campaign Strategy
Educating your donors about these options not only helps to diversify the types of gifts your campaign can receive but also opens up unique giving opportunities for donors who might not have liquid cash readily available but possess (or prefer to give) significant non-cash assets.
Steps to Incorporate Non-Cash Gifts
Develop Policies and Procedures: Ensure your organization has clear policies for accepting and processing non-cash gifts.
Educate Your Team: Train your fundraising staff and volunteers on the benefits and logistics of non-cash gifts and how these types of gifts can help you reach your campaign goal.
Communicate with Donors: Use your website, campaign materials, feasibility study interviews, and in-person donor solicitation meetings to discuss non-cash giving options.
Leverage Professional Advice: Encourage donors to consult with their financial advisors to determine the best giving option for their situation.
Thank Donors Promptly and Personally: It’s possible that donating non-cash gifts can involve more of a process on the donor’s end than just writing a check. Be sure to recognize this effort in your acknowledgments.
By highlighting these non-cash donation options, you can provide donors with flexible and tax-efficient ways to support your capital campaign, especially during the crucial quiet phase. These options not only enhance your fundraising potential but also build stronger relationships with your donors by catering to their financial planning needs.
Embrace these opportunities to ensure your campaign is well-supported and positioned for success!
