What is Your End-of-Year Strategy for Planned Gifts of Assets?

The call came on December 2. The caller and I had met a few years before. He was a donor to one of our charity clients and we had talked about the possibility of gifting assets to reduce or eliminate tax liability. Now, there was a real urgency to the conversation—he was calling (the first week of December) because he needed to act quickly on my earlier advice. He had received an offer on an industrial area he owned, and he wanted to know how to accomplish the pre-sale planning to get the deal done before the end of the year. He was facing a significant tax liability if he didn’t get this completed before the calendar rolled into January.

Needless to say, this created an “all hands-on deck” moment.

After a tremendous team effort, the donor successfully transferred his entire ownership into a donor advised fund (DAF) on December 30. This allowed him the complete deduction in that calendar year. A few months later, the DAF sold the property, and the donor contributed the whole amount (more than $1 million) from his DAF to our charity client.

That is a year-end giving story worth remembering. But imagine how much easier it would have been if we hadn’t had to scramble at the eleventh hour.

Plan All Year for Year-End Gifts of Asset

It is imperative for nonprofit organizations, universities, and foundations to communicate about possible year-end gifts of assets throughout the year and certainly as soon as possible in the last quarter of the year, but sometimes a last-minute rush is unavoidable.

Last year, I worked with a family selling their business. We did the philanthropy architecture for them well in advance as they negotiated the details of the sale. The buyer kept pushing things back and slowing things down until we found the end of the year upon us. Then, at the last moment, the buyer wanted to hurry and get the deal done, threatening any charitable planning option for the seller.

Luckily, the family decided that doing the proper charitable planning was too important to be rushed. They refused the deadline and insisted on completing their planning. Because they stood their ground, they realized a massive tax savings and resources were redeployed to the charities they cared about. I find that once families understand the power of pre-sale planning, they often become passionate about the impact they can make.

5 Keys to a Year-End Asset-Based Giving Strategy

Because these deals can become complicated, I suggest five keys to a year-end, asset-based giving strategy.

1. Listen for Opportunities

When you visit with your donors, be sure to listen and actively respond to what is happening in their lives. Many situations can indicate a donor’s readiness to discuss end-of-year gifts of assets. For example:

• Are they considering retiring?
• Do they own real estate that they are tired of maintaining?
• Are they contemplating the sale of their business?

If you have developed a trusting relationship with your donors, these conversations are not awkward; they are simply active, caring listening.

2. Connect with an Expert

If a donor indicates they are thinking of liquidating an appreciated asset, it’s likely you’ll need help from an expert in asset-based giving. Why? Most donors don’t want to reveal their net worth to advancement leadership. Nonprofit organizations and universities have to walk the tightrope of wanting to help a donor consider an asset gift without being seen as too involved in the process. Serving your donors might include providing them with a knowledgeable partner who understands the donor relationship and the intricacies of implementing an asset-based gift.

3. Keep Calm About End-of-Year Deadlines

As a leader of a nonprofit, healthcare, or university development office, be careful not to sound frantic about the upcoming year-end. There is a fine line between inspiring donors to consider transformational gifts and sounding like the sky is falling if gifts don’t come in before the end of the year. It simply is not inspirational for a charity to declare that they must have more resources in the next few weeks to meet their budget. How, then, should you talk about year-end gifts of assets?

• Focus on impact
• Focus on the lives that will be changed by the generosity of year-end giving

Even as year-end approaches, provide donors with the resources and inspiration they need to support your cause, without relying on urgency as the motivating factor.

4. Market Your Legacy Society

If your organization does not yet have a legacy society, consider creating one. A legacy society is a group of your most ardent supporters who have made the decision to include your organization in their estate plans. Formally recognizing donors of assets can build your fundraising program overall: a Giving USA survey found that 45% of planned giving donors increase their annual giving after making a legacy gift to a nonprofit, school, or foundation.

Remind your prospects and donors about your legacy society’s perks (anything from a lapel pin to exclusive social events to discounts on merchandise) and the long-term benefits (establishing a legacy, honoring a loved one, being part of a group with a shared mission, etc.).

Promote your legacy society via email and multiple communication channels:

• Website
• Events
• Direct mail
• Social media
• Advertisements
• One-to-one conversations
• Member listings in your annual report, playbills, etc.

5. Suggest a Bunching Strategy

As the final element of your year-end asset-based strategy, pitch the idea of bunching, which is simply an intentional plan to maximize gifts into one tax year. Bunching offers donors the possibility of minimizing tax liability. With the standard deduction for a couple being over $29,000, bunching becomes very attractive. ­

Here’s how it works:

• A donor might give two years of current giving before the end of the year. This allows them to itemize their taxes and maximize their deductions. 
• They accomplish this by gifting appreciated assets; they receive the additional advantage of not having to pay capital gains taxes on the asset sale. 
• In the next year, when the donor does not have an asset sale, they take the standard deduction and thus maximize their tax advantages. 

Year-end planning should not simply be a letter to donors asking for a last-minute gift. Instead, it should be a well-thought-out strategy to inspire donors to consider transformational giving. This strategy should be articulated clearly by all donor-facing staff and should provide resources to help with donor implementation.

Now is the time to learn more about year-end strategic planning by checking out Your Ultimate End-of-Year Fundraising Toolkit.