Art and collectibles can have a tremendous amount of value so you may consider using these items to further your philanthropic interests. Historically most people have donated cash to their favorite charities. Instead of writing checks, some individuals may consider converting their tangible assets such as art, jewelry, wine and other valuable collectibles into a philanthropic opportunity. Using tangible assets in a strategic philanthropy initiative presents families with the chance to work collectively to create a unifying legacy.
If you are contemplating a gift of tangible personal property to charity, it is important to be aware of the complex tax issues.
Below are a few issues to consider:
- Have you owned the donated object for at least one year?
- Will the donated object be used by the charity in its tax-exempt function (related use)?
- Has the charity agreed to keep the object for at least three years?
- Are you a collector or investor? If you are an artist or dealer, consult a tax advisor to understand the different IRS tax allowable deductions.
- Have you obtained an IRS qualified donation appraisal for the donated object?
What are other philanthropic options for tangible assets?
Charitable giving has never only been motivated by tax deductions. Even without the full tax advantage, clients can still consider donating to passionate causes by converting their valuable objects into liquidity for a cause they really believe in. In some cases where the need for a charitable deduction outweighs the importance for minimizing capital gains tax, it may make sense to sell the art, jewelry or other tangible assets, recognizing the income and offset it by making a charitable contribution to a donor advised fund. This allows the donor to possibly maximize their tax situation while unlocking art and other tangible assets for charitable dollars
There are many advantages that come with the use of a planned giving vehicle. Nevertheless, should a client decide to donate tangible objects to an institution, donor-advised fund, or foundation, a tax specialist should be consulted to determine the best option.
In conclusion, the field of strategic philanthropy is more sophisticated and complex than ever. More individuals are implementing a philanthropic strategy using collections of wine, art, jewelry and other tangible assets to help make a greater impact in the lives of others. Anyone that regularly writes checks to their favorite organizations and causes can develop a more strategic approach to giving by considering using tangible assets. Nonetheless, the philanthropic process involving these objects begins with understanding what your client owns and understanding the value.
For inquiries please contact Colleen Boyle
Senior Vice President &
National Sales Director