Has your charity ever refused a donation of a non-cash or illiquid asset because a) you didn't have the expertise,
the time or the staff to devote to the project, b) you knew your finance department or Board would likely decline the
gift because of potential risks, or c) the donor required a quick decision?
Our organizational structure and operating expertise - with more than 500 non-cash donations successfully
processed by our principals - was created to solve these challenges in a risk-free way.
The Opportunity
While the majority of charitable donations are cash and liquid, publicly-traded securities, the majority of the
nation's wealth is in illiquid assets such as real estate. Total stock market wealth is currently $12-14 trillion,
where the value of privately-held real estate alone is estimated to be between $40 to 60 trillion. According to the
Wall Street Journal (13-October-1999, page 2), of the $175 billion donated to U.S. charities in 1998, only two
percent had real estate as a source. Further, the New York Times stated in a 2002 article that "...more than 80
percent of real estate offered to charity by donors is initially declined." This does not include other non-cash
assets like privately-held C-corporations, S-corporations, LLCs, art/collectibles and limited partnerships which
represent additional untapped assets for charitable donations.
The Solution
Charitable Solutions, LLC, was formed to provide a comprehensive solution for charities and donors. Through
our association as the administrative and managerial services provider for Dechomai Foundation, Inc., we have
established a "customizable" one-stop service for non-cash donations.
Charities hire us to assist them in receiving non-cash donations directly or they can refer a non-cash donation to
Dechomai Foundation, Inc., where the donor establishes a donor-advised fund and recommends a grant of the
net proceeds back to the referring charity.
A partial list of non-cash donations that our principals have handled include:
- commercial and residential real estate
- net leased property
- operating partnership units
- restricted stock (144 and 145)
- closely-held / privately-held stock
- s-corporation stock
- limited partnerships
- limited liability corporations
- artwork
- installment notes
Tangible personal property - such as art, collectibles, antiques and other tangible personal property - is handled
on a case-by-case basis. We generally engage Laurence C. Zale at Laurence C. Zale Associates, Inc., for any
tangible personal property donations.
Charities tap into a donation source that:
- is difficult for many charities to handle
- may require additional experience/expertise
- is a tiny part of overall charitable giving currently
- could add 10 to 30 percent to a charity's annual donations
Charities benefit by:
- eliminating their non-cash risks by utilizing Dechomai Foundation as the receiving charity
- reducing the gift-acceptance process for non-cash donations to a minimum amount of time (usually 1 to
15 days) - Improving donor relations by accepting more non-cash donations, reducing the donor's turn-around time
and significantly improving the donor's overall donation experience - Accessing expertise in non-cash donations (more than 500 successfully processed) without adding
staff/costs
The Process
1. Charitable Solutions is introduced to a donor who wants to make a non-cash donation. The referring charity -
with agreement from Charitable Solutions acting as Administrator for the Dechomai Foundation - can continue to
manage the overall donor relationship while making clear that the non-cash donation is going to be made to
another 501(c)(3) non-profit - Dechomai Foundation, Inc. Dechomai does not act as an agent of the referring
charity.
2. Charitable Solutions conducts a preliminary interview with the donor and their advisors over the phone to
determine if the non-cash asset is indeed a good contribution candidate. If there is preliminary agreement to
proceed, Charitable Solutions will put together a "best guess" outline of the overall process - including an
estimate of fees involved and contribution timing- usually within 24 hours. This includes a determination by the
Board of Directors of Dechomai Foundation as to whether or not they will approve the acceptance of the non-cash
donation and under what circumstances and conditions.
Although Charitable Solutions, LLC acts as the administrative service provider for Dechomai Foundation,
Dechomai's Board has complete authority over all contributions and grants.
3. Charitable Solutions then develops a more formal liquidation plan for each non-cash asset. Dechomai
Foundation's goal is to receive the highest offer possible as quickly as possible with the lowest total expenses
possible. Neither Charitable Solutions, LLC, nor Dechomai Foundation, Inc., nor any related parties will receive
any commissions, fees, nor other compensation related to the sale of a non-cash asset, and does not represent
the donor in any way. The only fee received by Dechomai Foundation, Inc., is an administrative fee agreed to in
advance with the donor and is assessed on the settlement proceeds only.
In every case where we have been engaged to assist with the acceptance and liquidation of a non-cash donation
- whether via Dechomai Foundation, Inc., or working directly with another charity - the sales prices have generally
matched the appraised values the donors have claimed on Form 8283.
4. Upon liquidation and upon the donor's request and Dechomai's Board's approval, Dechomai Foundation will
then issue a grant to the referring charity for the net proceeds of the gift. This usually occurs 30-45 days after
receiving the sales proceeds.
See our Non-Cash Donation Flow Chart in the Library.
Since our inception, we have completed more than $100 million in non-cash donations!
| "Bryan helped us save a major real estate gift by offering several possible solutions. Without his advice, I doubt the 7-figure CRT (which will eventually roll into a donor advised fund) would have occurred." Connie Hendrix-Kral, Ed.D. Director for Donor Relations Northwest Arkansas Community Foundation |
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