Gift Plan Details: Personal Property

Important: Use the green navigation on the left to properly sort your questions.

	1.	What assets can donors use to make a planned gift? They can use cash, securities (stock, bonds, mutual fund shares) or real estate. They can give tangible personal property (artwork, books, artifacts, equipment, etc.) They can fund a gift plan with a business or partnership interest (closely held stock, a share in a professional corporation, an investment in a limited partnership). They can give you a paid-up life insurance policy. Donors can also direct a charitable distribution from the balance remaining in their retirement plan (IRA, 401(k), Keough, etc.) at death. They can also make your organization the owner and beneficiary of a new life insurance policy. Note: Some gift assets can prove challenging for a non-profit to administer and/or liquidate, and your organization should review offers of non-traditional assets carefully before accepting them.
	2.	What is the deduction for a gift of property like artwork, books, equipment, etc.? If your organization can use the property to further your tax-exempt functions (also known as putting it to a "related use"), the deduction is the fair market value of the asset. However, if you cannot use the property, or if the donor instructs you to liquidate it and use the cash proceeds, the deduction will be limited to the donor's cost basis in the asset. Note: The broader your organization's charitable functions, the more "related uses" can be found for gifts of personal property. A college, a library, a museum and a hospital, for instance, could all put a painting to good use, even if it wasn't the same use. Non-profits with more narrowly focused missions, on the other hand, may be hard-pressed to find a use for a proposed gift of personal property.]
	3.	Can your organization determine the fair market value of a gift of property for the donor? No, the IRS says that establishing the FMV (fair market value) of any gift asset except cash, publicly traded securities or mutual fund shares is the responsibility of the donor, through the services of an independent appraiser.
	4.	How does a donor verify a deduction for a gift of property? Except for publicly traded securities, gifts of property worth $5,000 or more ($10,000 for shares of closely held stock) held by donors longer than 1 year must be appraised in order to establish their fair market value (and thus the charitable deduction donors may claim for the donation). Appraisals must be obtained by the donors and not the recipient charity, and must also be obtained for the purpose of valuing the gift (in other words, insurance appraisals are not acceptable). Donors are required to get their appraisal not earlier than 60 days before they make their gift, and not later than the due date for the tax return on which they are claiming their deduction.
	5.	How does the IRS monitor gifts of property? Closely! Donors must file IRS Form 8283 ("Noncash Charitable Contributions") if the amount of the total charitable deduction they are claiming for all noncash gifts is more than $500 for the year. If one item of donated property, or a group of similar items, exceeds $5,000 in claimed value (unless the property is publicly traded securities), donors must also summarize on Form 8283 the appraisal they obtained on that property. The appraiser and a representative of your organization must also sign that appraisal summary. If, within 3 years of the date of the gift, your organization sells or disposes of donated property for which the donor claimed a deduction of $5,000 or more (except for publicly traded securities), you must file a separate report to the IRS, Form 8282 ("Donee Information Return"). You state the donor's name, identify the property, and tell when you received the property, when you disposed of it, and what proceeds, if any, you received on the disposition. You can download Form 8283, its Instructions, and Form 8282 plus Instructions here. Caution: The requirements that the IRS places on donors to substantiate charitable deductions for property gifts are complicated - we've just given you a summary here - and there are penalties for non-compliance. As your non-profit's representative, be careful about providing any advice to donors about compliance, and urge them to consult with their own advisors before making a property gift.
	6.	I need a quick reference guide on the details and funding options for planned gifts. Help! You've come to the right place. Purchase The Ultimate Quick Reference Planned Giving Pocket Guide that also comes with a fold-out "cheat sheet" titled When How and Why to Plan a Gift. At $24.95, it's a bargain. (Quantity discounts for staff, board members and volunteers.)

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Gift Plan Details: Personal Property

What assets can donors use to make a planned gift?

What is the deduction for a gift of property like artwork, books, equipment, etc.?

Can your organization determine the fair market value of a gift of property for the donor?

How does a donor verify a deduction for a gift of property?

How does the IRS monitor gifts of property?

I need a quick reference guide on the details and funding options for planned gifts. Help!

Ask Brian