Creating Legacy and Maximizing Impact with Tangible Assets

When it comes to making donations, most individuals tend to reach for their checkbook or credit card. Since less than 10% of America’s wealth is held in cash assets (U.S. Census Bureau 2022), thinking about charitable giving in cash-only terms limits the impact individuals can make on their favorite causes. While a cash gift may be the first thing that your clients think of, some may be surprised by the wide range of tangible assets that charitable organizations accept.

As an alternative to checkbook philanthropy, it may be advantageous for your clients to consider converting their tangible assets – such as fine art, jewelry, and other collectibles – into philanthropic opportunities. Many collectors share the desire to preserve their legacy for future generations, and using these assets in a creative and strategic manner allows individuals and families to maximize their charitable impact and further their legacy.

There are also unique tax benefits to donating tangible assets, particularly when the item or collection has appreciated. For your clients to receive the most favorable tax benefits from a gift of a tangible asset, there are a few key rules to keep in mind:

1. The donated items are qualified capital gains property. This generally means that the donated items have been owned for at least a year, are not tangible items created by your client, and were not gifted to your client by their creator.


2. The donee organization is a qualified public charity. The charity must serve a public interest and must meet an “organizational test.” Additionally, the charity must be organized and operated for a religious, charitable, scientific, literary, or educational purpose.


3. The donee organization must make “related use” of the gift. Your client’s gift of tangible personal property must be related to the exempt purposes or functions of the organization. For example, if your client donates a coin collection to the American Numismatic Society for the purpose of expanding its museum collections, your client would receive a deduction of fair market value since the collection relates to the Society’s mission of increasing the knowledge and enjoyment of coin collecting. However, if your client donated that same collection to a hospital that intends to sell and use the revenue for its capital campaign, your client can only deduct their cost of acquisition. The donee organization should provide a written gift acknowledgement, stating that it is a qualified public charity, and that the donation satisfies the related use rule.


4. The donated items have a “qualified appraisal”. The IRS requires a qualified appraisal if the gift of tangible assets is more than $5,000. If the gift is greater than $20,000, a complete copy of the signed appraisal must be attached to the tax return. A qualified appraiser is an individual who holds themselves out to the public as an appraiser and has earned an appraisal designation from a recognized professional organization or has met certain education and experience requirements. Heritage Auctions Appraisal Services, Inc. offers an experienced team of objective appraisers to evaluate and appraise tangible personal property in over 50 collecting categories. All appraisals meet the required IRS, legal and Uniform Standards of Professional Appraisal Practice (USPAP) to function as qualified valuations of tangible property.

Your clients can develop a more strategic approach to philanthropy by using tangible assets like rare wine, jewelry, sports memorabilia, comic books, and more. But it is crucial that they understand the value of these assets before considering a charitable donation. Developing relationships with experts at auction houses and appraisal firms is a great first step in this lengthy but rewarding process. Additionally, it is important to be aware of the complex tax issues these gifts can present, which will need to be carefully evaluated by legal and tax professionals to maximize your client’s gift and the possible deduction.

About the Authors

Taylor Strander, Trusts & Estates Representative at Heritage Auctions

Taylor Strander serves as Trusts & Estates representative in Heritage Auctions’ Dallas headquarters. She works with families, advisors, and fiduciaries throughout the Southern region to provide estate, appraisal, and consignment services. Her keen eye for design and marketing has been instrumental in elevating the Trusts & Estates division’s overall brand awareness through innovative client events, email campaigns, and marketing initiatives.

Taylor is a committee member of the Dallas Estate Planning Council’s Emerging Professionals chapter and is the Editor of Heritage Auctions Journal for Trusts & Estates Advisors.

Deborah A. Daly J.D.

Deb Daly is a former Trusts & Estates representative in Heritage Auctions’ Chicago office. Following a 30-plus-year career in estate and trust settlement at Northern Trust, Deb joined Heritage Auctions in 2019 and played a pivotal role in helping Midwest clients and advisors navigate the complexities of estate planning and the valuation of tangible assets.