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May 13, 2026 – Donor gifts range from simple to complex. While cash contributions are straightforward, gifts of noncash assets — such as closely held business interests, partnership interests or real estate — carry additional tax and legal considerations. These gifts can unlock meaningful opportunities for donors to support your mission, but only if your organization is prepared to evaluate and process them carefully. Before saying “yes,” it’s essential to understand exactly what is being offered and how it may impact your organization.

What should nonprofits consider before accepting a complex charitable gift?

From a tax perspective, details matter. Information such as the donor’s cost basis, holding period and whether the asset is subject to long‑term or short‑term capital gains treatment can influence how the gift is handled and reported. Staying current on applicable tax laws is critical, as outdated assumptions or regulations can lead to processing errors or compliance issues.

It’s also important to evaluate whether the asset could generate Unrelated Business Taxable Income (UBTI). Interests in partnerships, LLCs or income-producing investments may trigger a tax liability if the income is not tied to your charitable purpose. Identifying potential UBTI exposure early helps prevent unwelcome surprises for you and your donors.

Strong legal and administrative practices are equally important. Clear documentation, including gift receipting, required IRS forms and qualified appraisals when applicable, protects your organization, provides transparency and reinforces donor trust. 

Where is the gift from?

In addition to understanding the type of gift, it’s important to consider where the gift is coming from. Knowing a gift’s origin supports accurate tax and legal reporting and helps you acknowledge donors appropriately.

Consider these questions when researching a gift’s origin.

Are there any risk factors based on where the gift is coming from?

Research any potential risks before accepting a gift. For example, gifts of real estate may carry hidden environmental liabilities or high maintenance costs that could ultimately harm your nonprofit. Understanding the full picture upfront avoids any unwelcome surprises later.

Is the donating entity an individual, a public charity/private foundation or a business?

The donor’s status can affect how you process the gift and how they receive tax benefits. If the donor is a public charity or private foundation, verify that they are a legitimate charitable organization operating as stated in their public filings. Online resources such as Candid GuideStar and the IRS Tax Exempt Organization Search can help confirm this.

If accepting a donation from a business, such as partnership interest or S-Corp shares, exercise additional caution. These gifts may come with special tax requirements or fees. Consult with a legal professional before accepting to confirm that this gift will not adversely affect your organization in the future.

Where is the gift going?

In addition to understanding a gift’s origin, nonprofits must also consider how the gift will be used. Ensuring that a gift’s purpose aligns with your organization’s mission and tax-exempt status is essential for compliance and responsible stewardship.

When evaluating a gift’s destination and intended use, consider the following:

• Is your nonprofit a public charity or private foundation?
• Who is the gift for?
• Who does the gift benefit ultimately?
• Will the gift be used for the organization’s charitable purpose?

Have you done your due diligence?

When conducting due diligence research before accepting an illiquid or complex gift, consider these four main areas:

1. Confirm that the organization is in good standing. The organization should be in good standing both with the IRS and applicable state departments (secretary, attorney general, charity registry, treasury, and/or comptroller’s office).

2. Verify that the proposed activities further the tax-exempt purposes of both the sending and receiving organizations. If the proposed activities do not further the tax-exempt purposes of both organizations, penalties or unrelated taxable income may apply.

3. Prioritize substance over form. Take a step back and ask yourself, “Is this the right result for our organization and mission?”

4. Be polite and show grace. It is not unusual that donors and organizations are unaware that something may be inconsistent.

Noncash assets are an exciting way for donors to give to the causes they are passionate about. Knowing how to accept these gifts well builds donor trust and saves your nonprofits from potential missteps.

If you have questions about accepting gifts of complex or illiquid assets, our Trust and Legal team is here to help. Please reach out to us at 214.978.3300 or legalteam@highgroundadvisors.org.