A Coin Collection Turns to Charitable Gold

Donating illiquid assets—those that cannot be easily sold or exchanged for cash—is an increasing trend. We’ve seen all types of assets offered as charitable donations, from antique furniture to real estate.  While there have been a few that we could not accept, such as a surf board collection and a military tank, those we have accepted have had a major philanthropic impact.

Our due diligence process for illiquid asset gifts is rigorous and includes a review of all documentation relating to ownership and transfer of the asset. There are legal fees associated with illiquid asset gifts, and the IRS requires donors to obtain an appraisal to substantiate the value of their charitable tax deduction.

One of the most unique gifts we have received came from a donor’s estate. The donor, a North Carolina-based businessman with no heirs, bequeathed most of his assets to his donor-advised fund, including a collection of gold coins.

NPT worked with a licensed appraiser to value the coins and sell them to interested collectors. The proceeds from the sale were invested in the donor-advised fund according to a strategy pre-selected by the donor during his lifetime. NPT makes grants each year to three of the donor’s favorite charities on an annual basis according to the donor’s wishes.

The donor chose to recommend grants over time to small charities in his local community so as not to overwhelm organizations that may not have the resources or strategic plan to responsibly manage the grant funds. The donor-advised fund was established with nearly $1 million dollars. It retains over 80% of that balance years later because of investment returns and the donor’s long-term grantmaking strategy.

This particular case study highlights some key benefits of the donor-advised fund:

• NPT is poised to accept complex and illiquid assets and turn them into charitable dollars
• Donors can make bequests to a donor-advised fund to establish a charitable legacy that continues well beyond their lifetime
• Donor-advised fund assets grow tax-free, so, depending on the investment and grantmaking strategies, a donor can sustain giving into the future

We expect we will see this trend of gifting illiquid assets to charity continue for years, particularly as Baby Boomers transfer wealth to their Gen X and Millennial children.