Charitable Gifts of Non-Cash Assets

The path of least resistance is the path that most people take. I think that is a safe-enough belief that I don't need to cite peer-reviewed studies in order to make that statement. It is what we might call "common-knowledge". When it comes to fundraising, this takes the form of the ever-present "Cash is King" mantra. Ugh. Where is my barfing face emoji when I need it most?

Many authors, much smarter than me, have attempted to prove the insanity of that mantra by spewing facts and figures about the billions or trillions of dollars being held by the aging and perennially retiring horde of boomers and their strangle-hold on the lion's share of wealth, and the inevitable transfer of those assets over time as they seek to find ways to liquidate their businesses and other substantial assets. I won't attempt here to update all of these numbers because numbers seem to fail the test when it comes to altering fundraising practices. Let it suffice to say that there is more than enough out there to exceed every campaign goal of every charitable organization in any phase of any size campaign. Is that enough?

The issue at hand is our willingness (or lack thereof) to engage in the complex and nuanced world of non-cash assets- Period. End of Story. Like others, my definition of non-cash assets includes assets that are sometimes referred to as "illiquid". So, let's define that. Liquid means the asset is accessible as cash, or easily and quickly converted to cash. Liquid assets include Cash (duh), Marketable Securities (those you can buy and sell through the stock market), including public stocks like those companies we hear about daily, and also collections of stocks held in investments called Mutual Funds and Exchange Traded Funds (ETFs). These collectively are called Equities because owning stock in a company is a form of holding equity in that company. This can also include Bonds, and collections of bonds in their own Mutual Funds or ETFs. Bonds are debt instruments as opposed to equity, but are typically liquid, sometimes with a penalty, but still considered liquid. And, Yes, there are piles and piles of these assets laying around and we should absolutely include them when discussing the funding source for a donor's gift. But...

The wealthier a donor is, the more likely they are to have a larger and larger share of that wealth in non-liquid assets. The only way to access the value of those assets is to talk with them about it early, and often. When I say often, I mean ALL THE TIME. See, the thing about illiquid assets is that timing is absolutely crucial. A donor might nod their head and agree with you the first time you mention using their business or some other illiquid asset, but about 12 seconds later they most likely forgot you even said it because you've said 12 other things. Illiquid assets only become liquid once (typically). We call this "Money in Motion" or "Liquidity Events". These events take place on our donor's timeline, not ours. This (IMO) is the absolute KEY in understanding why we are not seeing more gifts using these assets. We ask when we want a gift. Now, or better yet, yesterday. Donors who comply with our timeline MUST resort to liquid assets to meet these solicitations because we are asking them to operate on OUR timeline instead of theirs.

Challenge your organization to realize that strategic philanthropy (Gift Planning) operates on the donor's timeline. The largest and most impactful gifts can be made only when it is the right time for the donor to make what is to them a hugely life-altering change. Selling a business they started 20 or 30 or 50 years ago is not going to happen because your organization needs a lead gift for the next campaign, nor will it happen because it is the last year of a campaign and your organization wants to hit an arbitrary goal. High 6, 7,8, and 9 figure gifts take place when the donor's timing coincides with a compelling need, a shared interest and desire to make an impact, and a professional team of advisors to assist them with the process. Challenge yourself to talk with your donors and prospective donors about these assets every chance you have, and in the proper time and place it will all work out.