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What Would A Charity Do With A Quarter Horse ?
Donor-advised funds help philanthropists turn noncash assets into charitable donations .
By Karen DeMasters
What would a charity do with a chain of adult bookstores , a collectible set of surfboards or an antique army tank ? Sell them , of course , and use the money for whatever cause the charity supports . how about the interest in an orange grove , a shipment of soybeans or a quarter horse ? Same thing . those are only a few of the more unusual items that have been donated to charity by philanthropic individuals in the last few years . Known as complex ( or noncash ) assets , these can be donated just like traditional stocks and bonds to donor-advised funds , which convert them into cash for various charities , according to Eileen heisman , cEo of the National Philanthropic trust and the author of a recent report on these funds . the trust , based in Jenkintown , Pa ., is an independent , public charity that provides philanthropic expertise to donors , foundations and financial institutions .
“ we ’ ve gotten a coin collection , a chinese dining room set , a Picasso painting and diamond jewelry , among other things ,” heisman says . “ when it is something unusual like this , it is usually the financial advisor , rather than the donor , who calls us , and it is likely to be the advisor who suggested the donation to his client in the first place .” when noncash assets are given to charity through a donoradvised fund , the donor is usually the one who hires an independent expert to assess the value of the gift , which the fund then approves . the fund then makes the arrangements for insuring the item ; determines whether there are any legal restrictions involved in the conversion ; makes sure there is an exit strategy for converting the asset to cash ; and then sells the item to a legitimate buyer . the money is then put in the donor ’ s fund account and is available to be used for grants to the donor ’ s preferred charities . the managers of donor-advised funds say the amount of noncash assets being given to them has either held steady or increased , but also say such assets always make up far more than half of the donations received . they represent 60 % to 70 % of the donations made to Schwab charitable , a public charity and donor-advised fund , says Fred Kaynor , the fund ’ s managing director of marketing , business development and strategic partnerships .
“ Many philanthropically minded people have long-held , highly appreciated assets , including publically traded equities , that they want to donate to their favorite charities ,” Kaynor says . “ By giving the assets to a charity through their daF , they do not have to pay the capital gains tax , which they would have to pay if they sold the assets outright . that makes more money available to give to the charity .” donor-advised funds allow benefactors to put money in during years when it offers them tax advantages or when they have
september 2022 | financial advisor magazine | 29