Turning Noncash Assets into Community Impact: A Nonprofit’s Guide

It often starts with a conversation you didn’t plan for. A longtime supporter mentions that they’d like to give your organization a rental property instead of their usual year-end check. A board member’s spouse is selling a family business and wonders if some of the shares could go to your capital campaign. A retired donor asks whether you accept a stake in a private equity fund.

Offers like these can be the largest gifts your organization will ever receive. They can also expose you to costs, liabilities, and administrative work your team may not be built to handle. Many development teams are understandably unsure whether to say yes, say no, or say “let us get back to you.”

At Greater Houston Community Foundation, we work with nonprofits, donors, and their advisors to evaluate and facilitate complex gifts every day. This guide is written specifically for nonprofit leaders and development professionals. It walks through what complex assets are, why donors offer them, what your organization should evaluate before accepting one, and how partnering with us can help you turn a difficult gift into lasting community impact.

Keep reading, or get in touch with us to start working through complex assets for your organization today. Call the Community Foundation at 713-333-2210 or reach out directly to get started.

Key Insights

• Complex assets, including real estate, closely held stock, private equity interests, and tangible property, can unlock far larger gifts than donors would typically make in cash.
• Donors are often motivated by significant tax benefits, which is why understanding the donor’s perspective helps your team respond with confidence rather than hesitation.
• Illiquid assets carry real risks for nonprofits, from carrying costs and environmental liability to unrelated business income and long liquidation timelines.
• A written gift acceptance policy and a consistent due diligence process protect your organization while keeping the door open to transformational gifts.
• When a gift is beyond your organization’s capacity to accept directly, a donor can contribute it to a donor advised fund at the Community Foundation and recommend grants to your mission once the asset is converted.

Table of Contents

• What is a complex asset?
• Types of complex assets your donors may offer
• The tax benefits that motivate donors
• The challenges of accepting illiquid assets
• Due diligence: what to evaluate before saying yes
• How a donor advised fund can bridge the gap
• Aligning complex gifts with your donors’ philanthropic goals
• Expanding the charitable giving options you offer donors
• FAQ
• Partner with the Community Foundation

What is a complex asset?

A complex asset is any gift other than cash or publicly traded securities that requires additional work before it can support your mission. That work might include a formal appraisal, a legal review of ownership documents, a title or environmental search, negotiation with other owners, or a sale process that takes months or even years.

The defining feature of a complex asset isn’t its value but its lack of liquidity. A check can be deposited the same day. Publicly traded stock can typically be sold within a few days of transfer. A commercial building, a minority stake in a family company, or a limited partnership interest can’t be converted to cash on demand, and its value may be uncertain until a buyer actually pays for it.

For nonprofits, accepting a gift is only the first step. Your organization becomes the owner of the asset, with all the responsibilities that come with ownership, until it’s sold or put to use.

Types of complex assets your donors may offer

Complex assets come in many forms, and each one raises its own set of questions for your team. The table below outlines the most common categories of complex assets we see at the Community Foundation, along with the key considerations for any organization on the receiving end.

Publicly traded securities sit at the simpler end of the spectrum. Donating appreciated stock is one of the most common noncash gifts, and many nonprofits already have a brokerage account set up to receive it. Most of the other categories above require more planning.

Real estate is among the most frequently offered complex gifts. Donors who want to donate real estate often have owned the property for decades, and it may make up a meaningful share of their wealth. Business owners, meanwhile, may want to contribute closely held business interests before a sale or transition, but donating private stock to charity can be incredibly complex. Some of your donors may be interested in donating art to charity, but expert opinions and thorough valuations are essential if your organization wants to turn personal valuables into impact.

The tax benefits motivating donors

Understanding why donors offer complex assets helps your team respond thoughtfully instead of reflexively. In most cases, the motivation is a combination of generosity and significant tax benefits that cash gifts simply can’t match.

When a donor contributes a long-term appreciated asset directly to a public charity, they generally avoid paying capital gains taxes on the appreciation. They can also typically claim a charitable income tax deduction based on the asset’s fair market value, subject to limits based on their adjusted gross income. If that same donor sold the asset first and gave you the after-tax proceeds, both they and your organization would end up with less.

For your development team, this has a few practical implications:

• Donors can give more than they could in cash. A donor who would never write a seven-figure check may be comfortable contributing a property or stake worth that amount, because the gift comes from wealth they hold rather than income they earn.
• Timing matters to donors. Business sales, retirements, and inheritances often prompt complex gift conversations, and donors are usually working against a deadline set by a transaction or a tax year.
• Donors’ advisors will be involved. Expect CPAs, estate attorneys, and wealth managers to be part of the conversation, and expect them to ask detailed questions about how your organization handles the gift.

The deduction a donor receives depends on several factors, including the type of asset, how long they’ve held it, and how the receiving organization will use it. Your organization doesn’t need to provide tax advice, but knowing the basics helps you understand what your donor is hoping to accomplish.

The challenges of accepting illiquid assets

Illiquid assets can be transformational, but they can also strain an organization that isn’t prepared for them. Before accepting any complex gift, your leadership should understand the potential risks that come with ownership.

Some of the most common challenges include:

1. Carrying costs. Real estate in particular can come with property taxes, insurance, utilities, maintenance, and HOA dues that your organization must cover until the property sells.
2. Environmental and legal liability. Contaminated land or buildings with code violations can create liability that follows the owner, and that owner would be your organization.
3. Debt and encumbrances. Property or partnership interests that carry debt can create unexpected tax consequences for both the donor and your nonprofit.
4. Unrelated business income. Certain assets, including S corporation stock and some debt-financed property, can generate income that is taxable to your organization.
5. Uncertain value. An appraisal is an estimate. The eventual sale price may be lower, which can affect campaign projections and donor relationships.
6. Long liquidation timelines. Some assets take months or years to sell, which means the gift may not support your programs as quickly as a cash gift would.
7. Staff capacity. Managing a property sale or negotiating with co-owners of a private company can consume time your team would otherwise spend on the execution of your mission.

None of these challenges means your organization should automatically decline a complex gift. They do mean the decision deserves a structured, consistent evaluation process.

Due diligence: what to evaluate before saying yes

Thorough due diligence protects your organization, your board, and your donor relationships. The goal isn’t to discourage complex gifts but to make sure every gift you accept will actually advance your mission.

Start with a gift acceptance policy

If your organization doesn’t already have a written gift acceptance policy, creating one is the most valuable step you can take. A strong policy defines which asset types you’ll accept, who has authority to approve them, what review is required, and when a gift should be referred to an outside partner like Greater Houston Community Foundation. A policy also gives your development staff a respectful, consistent way to respond to donors, rather than improvising when an unexpected offer arrives.

Review the asset itself

Your review should match the asset type, but most evaluations cover a common set of questions. Before your organization takes ownership, consider asking:

• Is the title clear, and are there liens, mortgages, or other encumbrances?
• Has an environmental assessment been completed for any real property?
• Do shareholder agreements, operating agreements, or partnership documents allow the transfer, and do other owners need to consent?
• Are there ongoing obligations, like capital calls, leases, or service contracts?
• Is there a realistic path to selling the asset, and how long is it likely to take?
• Will owning the asset create taxable income for your organization?

Know your reporting responsibilities

Accepting a noncash gift creates some administrative obligations for your organization, too. For larger gifts that require a qualified appraisal, the donor will typically ask your organization to sign the donee acknowledgment portion of IRS Form 8283, confirming that you received the property. Signing that section acknowledges receipt; it does not mean your organization agrees with the appraised value. If your organization sells or disposes of certain donated property within three years of receiving it, you may also need to file IRS Form 8282. Your organization’s own tax and legal counsel should confirm which requirements apply to each gift.

Watch the timing of business-related gifts

When a donor wants to give shares of a company that’s being sold, the timing of the gift is critical. If a binding sale agreement is already in place before the shares are transferred, the donor may lose much of the tax benefit they were counting on. Encouraging donors to involve their advisors and reach out early to a philanthropic partner, like the Community Foundation, ideally should take place well before a deal is finalized. Starting early helps protect both the donor and the gift.

How a donor advised fund can bridge the gap

Sometimes the right answer for your organization is neither yes nor no. When a donor offers an asset your team isn’t equipped to manage, a donor advised fund at the Community Foundation can give the donor a path to make the gift while your organization still benefits from it.

Here’s how it typically works: The donor contributes the complex asset to a donor advised fund at the Community Foundation rather than to your organization directly. Our team handles the review, transfer, and eventual liquidation of the asset. Once the proceeds are in the fund, the donor can recommend grants to your organization, either all at once or over several years. The donor generally receives their charitable deduction when they contribute to the fund, while your organization receives cash grants without ever taking on the risks of ownership.

The comparison below shows how the two approaches differ from your organization’s point of view.

This approach can also preserve relationships. Instead of declining a donor’s offer, your team can introduce them to a partner who can help them complete the gift, keeping your organization at the center of their philanthropy.

Giving through an endowment fund

For donors who want their gift to support your organization permanently, an endowment fund at the Community Foundation can be an especially meaningful option. Instead of recommending grants over time, the donor contributes the complex asset to establish an endowed fund that names your organization as its beneficiary. 

Our team reviews and liquidates the asset, just as we would for a donor advised fund. The proceeds are then invested for long-term growth. Each year, a portion of the fund is distributed to your organization under the Community Foundation’s spending policy, and the remainder stays invested so the fund can keep growing.

Endowment funds suit many donors well. They generally receive their charitable deduction in the year of the gift and avoid the capital gains taxes they would owe if they sold the asset first. They also get the assurance that the property or business stake they spent years building will keep supporting a cause they care about for generations. 

Aligning complex gifts with your donors’ philanthropic goals

The most successful complex gifts begin with a conversation about the donor’s philanthropic goals, not the asset itself. When your team understands what a donor hopes to achieve, you can help shape a gift that works for everyone involved.

Some helpful questions to explore with donors include:

• What impact do they hope this gift will have on your organization and the community?
• Do they want the gift to support a specific program, a campaign, or your endowment?
• Is there a transaction, retirement, or other life event influencing their timing?
• Would they prefer to make one gift, or support your organization over several years?
• Who else should be part of the conversation, like family members or professional advisors?

These conversations often reveal that a donor has more flexibility than their initial offer suggests. A donor who wants to support your endowment may be just as happy contributing a property to a donor advised fund and recommending a series of grants. A donor with a pending business sale may be able to plan a gift that benefits several causes they care about, including yours.

Bringing in a philanthropic advisor who works with complex gifts regularly can also help clarify options and reassure donors that their gift is being handled well.

Expanding the charitable giving options you offer donors

Nonprofits that proactively build their capacity for complex gifts can diversify their funding base and strengthen long-term resilience. Most donors hold far more of their wealth in assets than in cash, so offering a wider range of charitable giving options can open conversations that would never begin otherwise.

To build that capacity, you might consider these steps:

• Adopt or update your gift acceptance policy so your team knows how to respond when an offer arrives.
• Train your development staff to recognize complex gift opportunities and ask the right early questions.
• Let donors know you’re open to noncash gifts through your website, planned giving materials, and stewardship communications.
• Build relationships with local professional advisors, who are often the first to hear about a client’s charitable intentions.
• Identify a trusted partner, like Greater Houston Community Foundation, that can evaluate, accept, or facilitate gifts your organization can’t take on directly.

Your organization doesn’t need to become an expert in every asset type. Whether a donor is considering donating property to a nonprofit or contributing a share of their business, it’s often enough to know the right questions to ask and the right partner to call.

FAQ about complex assets for nonprofits

Can a nonprofit accept real estate that still has a mortgage?

It’s possible, but it’s complicated. Mortgaged property can create tax consequences for the donor and may generate taxable income for the nonprofit. Many organizations’ gift acceptance policies require that real estate be free of debt, or that encumbered property be reviewed by counsel before acceptance.

Can donors give private equity interests to charity?

Yes, but private equity interests often come with transfer restrictions, required manager consent, ongoing capital commitments, and long timelines before any liquidity. Nonprofits should review the fund’s governing documents carefully, and many donors find it simpler to work through a donor advised fund sponsor that has experience with these assets.

Is giving complex assets through a donor advised fund tax efficient for donors?

For many donors, yes. Contributing an appreciated asset to a donor advised fund generally lets them claim a deduction in the year of the gift, avoid capital gains taxes on the appreciation, and recommend grants to organizations like yours over time. It’s often one of the most tax-efficient ways to give an asset that’s difficult for an individual charity to accept.

When should a donor involve a charitable giving advisor?

As early as possible. A charitable giving advisor, along with the donor’s CPA and estate attorney, can help structure the gift, coordinate the appraisal, and avoid timing mistakes, such as transferring business shares after a sale agreement has already been signed.

Partner with the Community Foundation to turn complex assets into impact

As a community foundation serving the Greater Houston area, we see firsthand how complex gifts can strengthen the organizations working to improve our community. We also understand the pressure nonprofits feel when an unfamiliar gift lands on their desk.

Our team of philanthropic advisors can help your organization identify and evaluate potential noncash gifts, navigate compliance and documentation, and manage the liquidation of complex assets. Additionally, our team often is brought in to educate nonprofit staff and donors about the benefits and considerations of these gifts. When a donor’s asset is better suited to a donor advised fund, we can work directly with the donor and their advisors to complete the gift so that your mission still benefits.

Have a donor considering a complex gift? Curious about empowering your development team to recognize complex gift opportunities? Call us at 713-333-2210 or reach out directly, and we’ll help you determine the best path forward.

More Helpful Articles by Greater Houston Community Foundation: 

• How Donor Advised Funds Make Charitable Giving Easy
• How To Amplify Impact During Year-End Giving
• How to Donate Shares of Privately Held Companies
• Charitable Giving Year-End Checklist
• Guide to Giving During a High (Income) Tax Year

This website is a public resource of general information that is intended, but not promised or guaranteed, to be correct, complete and up to date. The materials on this website, including all comments and responses to comments, do not constitute legal, tax, or other professional advice, and is not intended to create, and receipt or viewing does not constitute, nor should it be considered an invitation for, an attorney-client relationship. The reader should not rely on information provided herein and should always seek the advice of competent legal counsel and/or a tax professional in the reader’s state or jurisdiction. The owner of this website does not intend links on the website to be referrals or endorsements of the linked entities.