Gifts of Tangible Personal Property and Life Insurance

March 18, 2019

When it comes to creative stewardship, people are often encouraged to think “outside the box”. Sometimes, however, it pays to think “inside the box” — inside the boxed treasures found inside their own home. Many people own valuable physical assets that can be creatively gifted to your ministry.

Tangible Personal Property
Physical assets are referred to by the IRS as “tangible personal property” or TPP. Examples could include collectibles (rare books, coins, stamps, and baseball cards), antiques, precious metals, jewelry and works of art. The opportunities for creative gift giving are endless.

Gifts of TPP create some terrific opportunities for your people and your ministry. By gifting such assets, members are acknowledging a key principle of Christian stewardship – God owns it all – I am just a manager. From the standpoint of your church, you are communicating that you want to help your members be creative in their giving.

As you might expect, there are some potential pitfalls to be avoided. You must carefully present the opportunity so people understand this is about giving their treasure, not their unwanted items. This can be easily accomplished by providing examples of desirable assets.

Unfortunately, in most cases, there are no tax advantages to the donor in making a contribution of TPP versus selling the asset and giving the cash. Therefore, donors should be encouraged to sell the property themselves. However, some churches have found it helpful to recruit an “eBay coach” – someone highly skilled in online auction selling. The eBay coach offers to help others who want to give/sell a valuable asset, but aren’t sure how to do it.

Life Insurance
Although not considered TPP, another overlooked category of creative gifting is that of life insurance. Many people don’t recognize that a life insurance policy is a gift-able asset. They perceive it only has value as a death benefit. While this is generally true for term insurance policies, permanent (or whole life) policies typically do have a current value.

When considering gifts of life insurance, donors should only consider contributing policies of which they no longer have a need as part of their personal financial plan. However, it is not unusual for some people to have an old whole life policy that is no longer needed.

Transferring ownership of a whole life insurance policy from an individual to the church is relatively easy. The policy owner simply completes a change of ownership form provided by the agent or insurance company. Once policy ownership is changed to the church, leaders have the option to maintain the policy in force or surrender it for cash value.

Although transferring a life insurance policy can be easy, valuing the asset for charitable deduction purposes can be more complex. The insurance company can provide a Form 712 which values the policy. However, as with all non-cash charitable gifts, donors need expert tax advice when claiming their charitable deductions. And, as a general reminder, donors are solely responsible for valuing all non-cash gifts for charitable deduction purposes.

God may already have provided many people in your church with a substantial gift to your ministry – it just may not be sitting in their checkbook – it may instead be sitting in their living room! Help them discover it. They will thank you and your ministry will benefit as well.