Non-Cash Gifts to Tell Capital Campaign Donors About
While most gifts to your annual fund are likely to be immediate gifts made through credit cards, checks, or bank transfers, during a capital campaign, some donors might want to make non-cash gifts. In fact, many campaign donors commit to the full amount of their gift but agree to a payment schedule spread out over multiple years.
While pledged gifts are the most common way of giving to a campaign, donors often make larger campaign gifts in ways that do not require the immediate transfer of cash. These are common enough that you should be familiar with them and be able to discuss them with donors who might like to explore other ways of giving.
In this post, we’ll review four of the most common kinds of non-cash gifts and highlight the key things to know about each of them. The suggestions here are not intended to provide legal or accounting advice but will give you a general understanding of the most frequent non-cash gifts.
Your campaign plan should include gift acceptance policies that spell out what will count toward your campaign and how gifts of various kinds will be valued. Be sure to have your policies vetted by professionals. A capital campaign is a wonderful time to review your gift acceptance and valuation policies to make sure they are thorough and up to current standards.
Here are four of the most common types of non-cash campaign gifts:
Securities
The most common non-cash gifts are gifts of securities. A donor calls his or her broker and asks him to transfer a certain number of shares of a specific stock or fund. Within a day or two, the organization receives a notice of the transfer that may or may not include the donor’s name. Sometimes it takes some sleuthing to figure out who the donor is!
Once the stock has been transferred to your organization, your organization should sell the securities, and you should do so as soon as possible so that the actual cash value of the gift matches as closely as possible the value of the stocks when they were transferred.
The value of a gift of securities should be determined at market value on the day of the transfer, not the cash received from its sale. So, it’s important that securities be sold quickly to minimize market fluctuation between the time the stocks are transferred and the time they are sold.
Real and Personal Property
Sometimes, a donor may wish to make a gift of real estate, art, or other equipment or property. When a gift of that sort is offered by a donor, your board must determine whether or not your organization should accept the gift.
Real and personal property gifts can be tricky and require careful research. Consider, for example, a property that was offered to a nonprofit. After some initial excitement about the gift, the organization did its due diligence only to find out that the property was contaminated. Mitigating the contamination would have cost the organization more than the value of the land, so the board declined the gift.
Sometimes donors offer gifts of paintings, antiques, or other real property. To accept such gifts, you’ve got to ascertain that the gifts are readily saleable and make sure the donor understands that the gifts will be sold. Occasionally, a donor will contribute a beloved painting, thinking that the organization will display the painting rather than sell it. Unless the painting is sold, the gift will not count toward the campaign. So, be sure to discuss your plans to sell the art with the donor before the gift is made.
The value of real and personal property should be determined by a mutually agreed upon and independent expert appraisal.
In-Kind Gifts
In-kind gifts are quite common. They might include gifts of construction materials or pro-bono services such as campaign counsel, accounting, graphic design, event planning, or architecture. To accept and count in-kind gifts toward a campaign, the materials or services to be given must already be included in the campaign budget, and the price of the donated items must follow the normal pricing policies.
The cleanest and simplest way to handle in-kind gifts is for the contractor or service provider to bill the organization for the materials or services and then, when paid, provide a cash gift to cover the billed amount.
Estate Gifts
If your campaign has an endowment component, you should be prepared to accept estate gifts toward your campaign. These gifts might take many forms, but the simplest and most common is a documented intent to leave a gift in someone’s will. These gifts are hard to evaluate. Some campaigns develop goals for the number of estate gifts committed during the campaign rather than for the projected dollar amount of the gifts.
If your campaign has an endowment component that does not require immediate cash, you might, for example, set a goal of obtaining 20 documented bequest intentions during the campaign period. Over time, those commitments can amount to significant revenue, though the timing is unpredictable.
Note that this post is not intended to be legal or accounting advice. When you talk with a donor about a non-cash or deferred gift at the beginning of your campaign, be sure to check with your lawyer and accountant to make sure you handle those gifts properly. And encourage your donor to get their own legal and accounting counsel as well.
