The Benefits of Non-Cash Giving

January 24, 2020

What percentage of your constituent’s total assets would you say are found in cash or checking accounts? Answer: about 10%. What percentage of your annual church giving comes from cash or checking accounts? Answer: generally 95% (and sometimes more!). What’s wrong with this picture?

“What’s wrong” is that most church leaders do not actively seek non-cash gifts. This is unfortunate for several reasons.

  1. Non-cash gifts can provide major tax advantages to the donor when compared to giving cash.
  2. Non-cash gifts may represent a new “income stream” to the church.
  3. Educating your people about creative, tax wise giving techniques empowers them to be better stewards as to how they give (not just how much they give). It is a classic win-win!

You may be wondering, “Is pursuing non-cash gifts worth the effort?” Look no further than to our friends in para-church ministries. Their donor communications regularly tout the ease and benefits of making non-cash gifts. They discovered long ago one of the best power giving secrets of stewardship development is that often, the largest gift a donor makes is not from cash.

Non-cash assets fall into one of three broad categories – financial assets, real estate and tangible personal property. Financial assets include stocks, bonds and mutual funds. Real estate can be residential, commercial or vacant land. Tangible personal property encompasses a very broad spectrum ranging from collectibles to precious metals to vehicles. In this and future posts we will explore each of these categories in detail, sharing strategies to promote them as well as pitfalls to avoid.

Golden Opportunities
American households own approximately $20 trillion in stocks and mutual fund shares. With financial markets recently near all-time highs, many of these assets have appreciated beyond their original cost. Appreciated financial assets such as these represent one of the “golden giving opportunities” for donors and churches alike.

autumn in park

What is so “golden” about gifting appreciated financial assets like stock? For starters, assuming the donor has held the asset for over one year, they are normally entitled to deduct the full fair market value on the date of the gift. Any appreciation that would have been subject to capital gains tax – had they sold the stock – is avoided. Assuming the church immediately sells upon receipt, it realizes the full value. Had the donor sold the stock, paid the capital gains tax and then gifted the remaining cash, the church would have received less money. So, the bottom line – more dollars to the church, a larger charitable deduction to the donor and no capital gains tax– what’s not to like!

Promoting Non-Cash Gifts
How can you facilitate receiving these types of gifts? First, let your people know that you are actively seeking such gifts. This can be accomplished simply by occasionally communicating a message like: “If you are interested in making a non-cash gift to our ministry such as stock, mutual funds or real estate, please contact John Doe, our Creative Gifts team leader to discuss the procedures and benefits”.

Beyond this simple announcement, additional strategies to create visibility and promote such gifts could include:

  • Distributing flyers/brochures explaining the benefits. (Commercial literature on this topic is readily available and can be branded to include your church name and logo).
  • Hosting a “creative giving seminar” taught by a financial professional such as a CPA, CFP or CFRE who is highly skilled and knowledgeable in tax wise charitable gifting techniques.
  • Featuring a testimonial (written or verbal) of a recent non-cash gift made by another church member.

Following are a few planning pointers as you prepare to receive non-cash gifts:

  • Open a brokerage account in the name of your church. Most transfers of shares are done electronically, therefor you will need to provide the donor (or their broker) with the church’s brokerage account number in order for them to make the transfer.
  • Have your accountant or bookkeeper brush up on proper IRS procedures for receipting non-cash gifts (see IRS publications #526 and #561). Note: for all non-cash gifts, it is always the donor’s responsibility to value their gift. Following IRS guidelines, your gift receipt should clearly describe the asset but not show any dollar value.
  • Handle all non-cash gifts (and especially first time gifts) with great care. By showing your donors that you have the systems and knowledge to competently handle their gift, you enhance their confidence for future (and perhaps larger) gifts.

We believe that taking the time to clearly communicate the advantages of non-cash gifts to your congregation and providing a way for people to respond will be well worth the time. Your ministry, and your members, will both benefit.