I am trying something new this issue...by featuring a guest author, the esteemed and seasoned Brad Caswell, on the topic of non-cash assets, which are really hiding in plain sight (just like this cute creature above). Brad frames his thoughts below in two parts: Why/How/What and Opportunity. Read on!
****
Why/How/What: I am a logical person. I try to fit the pieces of a situation together in an orderly structure. In the world of planned giving, estate planning, and campaign & major gifts solicitations, I try to make sense of the goals, the task list, and the discussions with prospects.
Here is a variation on the "Five W’s" framework, which helps clarify my thinking, and hopefully it helps you, too. I call it the Why, How, and What:
Why – is the donor thinking of making this gift? He or she has an energy for the mission and strategies of the charity, so what is the foundation of this passion? Focusing on "why" helps keep the discussion on one's interests and enables a deeper validation of the possible, and importantly, what is most meaningful.
How – would the donor like to make this gift? Might an outright donation of cash meet their personal financial situation? Are the tax consequences of the gift important? Do they want an income stream from the gift that would be available through a charitable annuity or trust arrangement?
What – is in their broad portfolio of wealth that they can leverage in a smart way to make their gift?
These three are distinct, and if managed purposefully, shouldn’t cross over into each other. Leading with a discussion of what assets a donor has in his or her portfolio, when the donor has first raised an interest in supporting a food pantry, is a bit out of order. Likewise, taking a preliminary discussion of the benefits of a charitable gift annuity right into the funding possibilities of an Individual Retirement Plan Required Minimum Distribution payout to meet philanthropic goals muddies the water, too. So, establishing the "Why" is step #1. Once the charitable intent has been established, stepping into each of the "What" and "How" follow easily.
Opportunity: There is data that suggests large opportunities in pools of untapped donatable assets. The “Cash is not King in Fundraising” analysis by Dr. Russell James asserts that focusing on cash donations keeps a charity’s gifts small, both individually and in the aggregate.
Discussing non-cash opportunities with prospects opens doors to larger gifts. Dr. James’ good work shows that 98% of the wealth in the US is held in non-cash assets. That includes publicly traded securities, so even entertaining gifts of publicly traded stocks opens the curtain significantly – by another 45%+ of the wealth pool by some estimates.
For those charities focusing on cash gifts, that’s a small pool to be fishing in, with lots of competitors asking for $50-$250 donations. The big cash gift ask may present the donor with a cash flow dilemma, in that a $2,500 cash donation might complicate the donors’ cash plans for the next 30 days.
But a $10,000 gift from a stock portfolio or IRA bequest represents a very different set of decisions for the donor. Not every charity should be accepting non-cash assets directly. There are costs, risks, long-term liabilities, and other factors that may be involved. Options exist, as there are a number of support organizations and partners that can enable gifts a charity may run from. A bank or a local brokerage firm is certainly willing to help process donations of public securities. Another popular bucket of assets are cryptocurrencies, and organizations are available to make those gifts a reality for a charity. Real estate and business interest inquiries should be welcomed, not turned away.
The moral of this story? Don’t say “no” to non-cash donations! Rather, embrace the generosity of your donors and bring in knowledgeable outside resources to assist with the gift conversation.
Read Brad's bio below:
|