Charitable institutions and universities that rely on donors to keep certain programs alive should focus on the power of non-cash donations. While many nonprofits primarily focus on cash gifts, which is still a beneficial endeavor, there is a whole world of opportunity in non-cash gifts that should be explored as well.
What are non-cash gifts?
A non-cash gift is any donation to an organization in a form other than actual money.
- Stock: The Massachusetts Institute of Technology allows its donors to contribute stock held individually or by banks and brokers. Any securities that have appreciated, which means they have increased in value since they were originally purchased, are valid gifts. This also works in favor of the donor, as he or she will receive valuable tax benefits after giving appreciated securities. Mutual funds are also applicable.
- IRA charitable rollover gifts: An IRA is an individual retirement account. They are set up by financial institutions and help employees save money for retirement. The funds accrued are not taxed, or taxed on a deferral basis. However, after the Pension Protection Act of 2006, individuals can make contributions to 501(c)(3) organizations up to $100,000 without paying taxes on the donation.
- Real estate: It’s possible to contribute interest in different property types to a nonprofit or university.
- Personal property: Hope International, a Christian-centered organization that helps people struggling in poverty find gainful employment, accepts vehicle, computer, cell phone and gift card donations. These items are used directly by staff and recipients to help the Hope International community grow. Schools like MIT also accept equipment, rare books and artwork that will contribute to its students growth and education.
Look at donors
A Small Change encouraged nonprofits to take a look at its wealthiest donors. It’s highly likely that these contributors have more assets than they do cash. They may be reluctant to donate cash, especially if they are currently retired or planning on retiring soon. In fact, many people tend to give more if they receive tax benefits on gifts.
Create an acceptance policy
Every nonprofit organization needs to write and distribute a non-cash gift acceptance policy. The National Council of Nonprofits stated that without one, it’s harder to report on gifts to the Internal Revenue Service. A strong policy also increases consistency across departments. Staff, board members and donors all need to be on the same page when it comes to contributions. It may even be a good idea to create two policies; one that focuses on information staff and board members need to know and another that outlines the various options and stipulations for donors.
Be sure to state that when it comes to donating assets or securities, donors should double check with their financial advisers. This prevents donors from feeling like they were led astray during the giving process. A gift acceptance policy that covers both cash and non-cash donations should be posted and easily accessible on the nonprofit’s website. There are many ways a charity or school can meet its goals; non-cash donations is one.
Donation management software is an excellent tool that can help nonprofits effectively track and report on their gifts, whether donations arrive in cash or non-cash form. It’s essential to smooth operations.