By Ryan Nicolussi, Private Client Manager
Interest is growing in donating more complex assets to charity. This includes stocks and shares, as well as less common assets, such as property, artwork or jewellery. Some of the more unconventional gifts our private client team have helped people to give in recent years are private equity shares, both residential and commercial real estate and, even, a Victoria Cross medal.
These types of items are still gifted less frequently than cash donations. But they provide donors with a unique opportunity, and tax-effective way, to maximise their charitable impact through leveraging their valuable assets.
Why make non-cash donations?
There are many reasons why someone might decide to make a non-cash donation. It is important to consider your personal circumstances and motivations for giving.
Gifts of non-cash assets can significantly advance your philanthropy. Many people think of donations to charity solely in terms of cash gifts. Non-cash donations allow donors to consider the entire spectrum of capital for charitable purposes.
You do not have to pay tax on land, property or shares that you donate to charity, and can benefit from income, capital gains or inheritance tax relief, depending on the gift you choose and your eligibility.
Complex assets that have appreciated in value can create significant tax liabilities when sold by the owner. You can claim capital gains relief on applicable non-cash gifts. Tax relief can be claimed when you give, or sell at less than market value, a qualifying non-cash asset to charity.
But above all else, non-cash donations provide an important source of philanthropic support, as Philip Hoffman, CEO of The Fine Art Group, tells us:
“For many collectors today — and particularly for the next generation — charitable giving through art and luxury assets has become a powerful way to shape a meaningful legacy, as an alternative to preserving collections. By leveraging these high-value assets, donors can achieve not only strategic tax advantages but also create lasting change in the causes that matter most to them."
Challenges of non-cash donations
The time and due diligence expertise it takes to facilitate these kinds of donations, however, means that not all charities have the capability to receive them.
Often charities will have to decline non-cash donations. This can be due to a range of factors, such as they don’t have the internal capacity, or it is simply impractical for them to accept the gift.
Determining the transferability of non-cash donations is resource intensive. Charities have a regulatory obligation to value and appraise complex assets before acceptance, which can sometimes throw up legal or cost implications. Following the acceptance of a non-cash donation, the liquidation of the asset may pose further challenges.
How CAF can support you
As the provider of the UK’s leading Donor Advised Fund (DAF), CAF can help.
Our Charitable Trust is a DAF. This is a giving account that operates under our registered charity status, offering you the advantages of your own charitable foundation without the extra time commitment needed or associated costs.
In addition to accepting a wide range of stocks through our Charitable Trust, we also have the flexibility and in-house expertise to facilitate more complicated requests with confidence and discretion – helping you to make more informed decisions.
From asset evaluation and regulatory compliance, through to gift receipt and processing, our dedicated team of private client managers are here to support you, your family and advisers.
As your trusted philanthropy partner, we are able to receive a complex gift into our Charitable Trust. All gifts are irrevocable and must be used for charitable purposes. We can then either onward donate or liquidate the asset (depending on the circumstances), enabling you to support your chosen charities.
To find out more about making a complex gift, please get in touch.
Please note that CAF does not provide financial advice, and you should discuss any potential personal tax implications with your accountant or financial adviser.