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Notebooks, new pencils and… noncash assets? The fall semester is in full swing and we’re continuing our study of the ABCs of charitable gift planning.

Today we turn our attention to noncash assets, a powerful but often underutilized way to give. According to IRS statistics, nearly 75% of charitable gifts are made in cash, yet an estimated 90% of household wealth in the U.S. is held in noncash assets. That’s a huge untapped opportunity for charitable giving. From real estate and mineral interests to retirement accounts, stocks, life insurance, and even cryptocurrency, noncash assets can unlock greater giving potential while offering substantial tax benefits. In many cases, donors can receive a charitable deduction equal to the asset’s fair market value, without incurring capital gains taxes upon its sale.

Whether you’re a donor looking to make a meaningful impact or a nonprofit professional guiding others through the giving process, understanding the language of noncash gifts is essential. Let’s break down the key terms and concepts that will empower you to make the most of this powerful giving strategy. Bookmark this guide as you continue your philanthropic journey.

Noncash Assets Glossary

• Adjusted Gross Income (AGI): An individual’s total gross income for the year minus IRS-approved deductions. AGI is used to determine the limit on the deductibility of charitable contributions.
• Appraisal: A professional, independent assessment of an asset’s fair market value. The IRS requires a qualified appraisal for most noncash charitable gifts over $5,000 (except publicly traded securities) to substantiate a donor’s tax deduction.
• Appreciated Assets/Property: Assets such as stocks or real estate that have increased in value since purchase. Donating long-term appreciated assets to charity can allow the donor to avoid capital gains tax and potentially qualify for a charitable deduction equal to the asset’s fair market value.
• Bargain Sale: A transaction where a property is sold to a charity for less than its fair market value. The donor’s charitable contribution is the difference between the property’s fair market value and the sale price.
• Basis: The original value or purchase price of an asset, used to determine capital gains or losses when the asset is sold or donated. For charitable donations, knowing the cost basis is key to evaluating potential capital gains and available tax deductions.
• Capital Assets: Significant pieces of property such as real estate, stocks, bonds, or collectibles held for investment rather than for sale in the ordinary course of business.
• Capital Gains Tax: The tax on the profit realized from the sale of a capital asset, such as stocks, bonds or real estate.
• Long-Term Capital Gains: Profits from the sale of assets held for at least one year. Often taxed at a lower rate and more favorable in charitable giving.
  
• Short-Term Capital Gains: Profits from the sale of assets held for less than one year, taxed at ordinary income rates.
• C-Corporation (C-Corp): A legal entity that is separate from its owners. It can buy, sell, and hold property in its own name and pays its own taxes. Companies that issue publicly traded stock are typically structured as C corporations. C-Corps can donate assets to charity and receive deductions subject to corporate giving limits. Donors may also contribute shares of closely held C-Corp stock, though such gifts can involve complex planning.
• Closely Held Business: A privately-owned business which is owned by an individual or small group of owners, who are often members of the same family. Interests in closely held businesses can be donated to charity but require valuation and careful planning due to tax considerations.
• Complex Assets: Nontraditional assets whose values are difficult to determine, such as closely held business interests, mineral rights or collectibles.
• Conveyance: The legal transfer of property ownership from one party to another. Often refers to transferring real estate or other noncash assets to a nonprofit.
• Cryptocurrency: A form of digital currency secured by cryptography and typically powered by blockchain technology. Donors may contribute cryptocurrency to charity and receive similar tax benefits as appreciated stock. A qualified appraisal is required for gifts exceeding $5,000.
• Environmental Appraisal: The process of evaluating the environmental risks and conditions of a property or asset before it is donated to a charitable organization.
• Fair Market Value (FMV): The price an asset would sell for on the open market between a willing buyer and a willing seller, both fully informed and not under pressure to buy or sell. FMV is used to determine the value of noncash charitable gifts for deduction purposes.
• Fractional Interest: The gift of an undivided partial interest ownership in an asset, such as real estate or art, rather than the entire asset. For the gift to be deductible, the donor must give an undivided interest, subject to IRS rules.
• Gift Acceptance Policy: A comprehensive document that addresses the key considerations and potential risks associated with accepting noncash gifts. This documentation helps ensure compliance with legal, tax and organizational standards by outlining issues such as asset valuation, environmental concerns, unrelated business taxable income (UBTI) and ongoing asset management responsibilities. Proper documentation supports transparency, facilitates informed decision-making, and protects both the donor and the recipient organization.
• Illiquid Assets: Assets that are not easily sold or converted to cash, such as real estate, private business interests, or collectibles. These assets can be donated to charity, but they may require appraisals and legal documentation.
• Lifetime Interest: The right to use or receive income from an asset during a person’s lifetime. Often used in charitable giving vehicles where the donor retains use of the asset until death.
• Letter of Intent (LOI): A document outlining a donor’s intention to make a charitable gift. Often used to guide discussions and planning before finalizing the gift.
• Life Estate in Personal Home or Farm: A planned gift in which a donor transfers ownership of their personal residence or farm to a charity but retains the right to live in and maintain the property for life (or lives). The donor receives an immediate charitable income tax deduction based on the value of the remainder interest, and the property ultimately passes to the charity upon the end of the life estate. The arrangement can extend to multiple lives, such as those of a spouse or child, before the charity’s remainder interest entitles it to possession of the property.
• Life Insurance: A policy that pays out to beneficiaries upon the insured’s death. Donors can support charity by naming a nonprofit as a beneficiary or transferring ownership of the policy outright.
  
• Noncash Assets: Tangible or intangible assets donated to charity other than cash, including real estate, securities, business interests or collectibles. These gifts often provide enhanced tax benefits compared to cash gifts but may involve more complex handling.
• Outright Gift: An irrevocable charitable gift made during a donor’s lifetime with no restrictions or retained interests. Outright gifts provide immediate support to the charity and typically qualify for a full charitable deduction.
• Partnership Interest: A donor’s share in a partnership, including income rights and responsibilities. Gifts of partnership interests can be complex and may trigger unrelated business income tax (UBIT) issues.
  
• Personal Property: Movable assets such as vehicles, art or jewelry. Donations of personal property may require a qualified appraisal.
• Publicly Traded Securities: Stocks, bonds or mutual funds that are listed on public exchanges. These are among the easiest noncash assets to donate, often allowing a deduction equal to fair market value and avoidance of capital gains tax.
• Qualified Appraisal: A written, IRS-compliant valuation of a donated asset by a qualified appraiser. Required for most noncash gifts over $5,000 to substantiate a charitable deduction.
• Real Property: Land and anything permanently attached to it, such as buildings, minerals and trees.
• Remainder Interest: The portion of an asset or property that passes to the charity after the expiration of a prior interest, such as a life estate. Remainder interests are often used in split-interest gift arrangements.
• Retirement Assets: Tax-deferred accounts like IRAs, 401(k)s or pensions. These can be powerful charitable tools, particularly through beneficiary designations or Qualified Charitable Distributions (QCDs).
• S-Corporation (S-Corp): A corporation that elects pass-through tax treatment, meaning income, losses, and deductions flow directly to shareholders. Donating S-Corp stock is possible but complex, as it may generate taxable income (UBTI) for the receiving charity.
• Split-Interest Gift: A gift arrangement where the donor divides benefits between charitable and non-charitable beneficiaries. Common structures include Charitable Remainder Trusts (CRTs) or Charitable Gift Annuities (CGAs). These gifts can provide lifetime income to the donor or others while ultimately benefiting a charity. For example, when a donor gives real estate to a CRT, the donor or another non-charitable beneficiary receive income for a term, and the charity receives the remainder interest at the expiration of the term. While a split-interest gift using a CRT can qualify for a charitable deduction, the donor must still convey an undivided interest in the property.
• Subsurface Rights/Mineral Interests: The legal rights to extract underground natural resources such as oil, gas, coal or metals. These rights may be owned separately from surface rights and can include resources such as oil, gas, coal, iron ore, sulfur, copper, silver and gold, depending on state law.
• Surface Rights/Surface Interest: The rights to use the surface of a tract of land for purposes such as farming, housing or commercial development. Often distinct from mineral rights, surface interests may also be gifted to charity.
• Tangible Property: Physical assets including both personal items (like art or vehicles) and real estate. These assets may be donated to charity and often require a qualified appraisal to substantiate a deduction.
• Unrelated Business Taxable Income (UBTI): Income earned from a trade or business not related to a nonprofit’s core charitable purpose. UBTI may trigger tax liability for the charity and affect the desirability of certain gifts.

What’s Next?

If you missed the earlier lessons, read Part 1 and Part 2 of our series on the ABCs of charitable gift planning. In Part 4, we’ll explore the key terms needed to understand mineral assets.

Remember, while this glossary is a great reference, charitable gift planning is personal and often complex. Our trust and legal team is here to help create customized strategies aligned with your values, financial goals and philanthropic mission.

Ready to explore how your noncash assets can support the causes you care about? Visit highgroundadvisors.org/gift-planning or contact us directly at 214.978.3300 or legalteam@highgroundadvisors.org.