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With a donor-advised fund (DAF), donors can make charitable use of nearly any kind of asset—not just cash. A DAF allows a donor to contribute non-cash assets, leveraging often-overlooked resources to provide financial support to grantees.
Non-cash assets, some of which may be called illiquid or complex assets, are wide ranging—from tangible personal property to stock in a private company. It is often possible to donate these assets to a DAF and use the proceeds from their liquidation for grantmaking—providing benefits for both the donors and the charities they support.
Here, you will find a helpful guide through the process of contributing a non-cash asset to a DAF. Read on to familiarize yourself with common definitions, general benefits, and how to start utilizing the full value of your non-cash assets for philanthropic giving.
Non-cash contributions are gifts made to a charitable organization of an asset other than cash.
The most common kind of non-cash asset to give as a charitable contribution is publicly traded stock. These assets can be freely sold on a public market to fund DAF grantmaking. Other non-cash assets which cannot be traded on a public exchange and may require additional processing and due diligence like real estate, shares of private companies or artwork are also sometimes referred to as complex, illiquid or specialty assets.
Below are some examples of non-cash assets often contributed to a DAF:
In most cases, when a donor contributes appreciated non-cash assets held for longer than one year to NPT:
Though “checkbook philanthropy” (via cash contribution) is alive and well, non-cash asset donations are rapidly growing in popularity among DAF donors. On average, more than 60% of contributions to NPT DAFs in a given year come in the form of non-cash assets.
*A qualified appraisal may be required to substantiate the fair market value of the contributed asset.
A wide array of asset classes are eligible for DAF contribution, which can prove very favorable if the asset has appreciated significantly. Donors who contribute appreciated non-cash assets to their DAFs can utilize the proceeds from the liquidation of the asset to fund current and future grantmaking.
While nearly all such contributions are possible, the process of contribution can be complex. No matter what stage of their philanthropic journey a donor is on, it’s always recommended to review the considerations for non-cash contributions:
Donor-advised funds (DAFs) are a powerful charitable planning tool for you and your clients.Learn More
Donors can easily gift publicly traded stock to their NPT DAFs by indicating on their Contribution Agreement the number, kind and value of shares that they will contribute, and then initiating the transfer of shares to NPT.
However, more complex non-cash assets—such as privately held business interest—will require further conversation. NPT will conduct a discovery call with donors and/or their advisors to discuss the specific due diligence process required for evaluation of the proposed gift. For additional information on requirements, fees, minimums and more, please read NPT’s Illiquid Asset Contribution Guidelines.
DAF Spotlight: Complex AssetsLearn More
DAF Insight: Contributing Hedge Fund Interests to your Donor-Advised FundLearn More
Appreciated Assets Increasingly Fund DAFs at NPTLearn More (External Link)