Donating Non-Cash Assets: A Practical Guide to Gifts in Kind

Overview

Donating non-cash assets—often called gifts in kind—lets you transfer property to a qualified charity rather than giving cash. These gifts can support a nonprofit’s programs directly (for example, donating equipment to a vocational school) or be monetized by the charity (selling artwork or securities) to fund operations. When done properly, gifts in kind can be tax-efficient: donors may avoid capital gains taxes on appreciated property and claim a charitable deduction for the asset’s fair market value (FMV), subject to IRS limits and substantiation requirements. For authoritative IRS guidance, see IRS Publication 526 and Publication 561 and the Charitable Contributions pages on IRS.gov.[1][2][3]

Why donors choose gifts in kind (briefly from practice)

• Tax efficiency: Donating long-term appreciated publicly traded securities or real estate often lets the donor deduct FMV while avoiding capital gains taxes on the appreciation. In practice, I’ve seen clients save more in combined income and capital-gains taxes by donating shares than by selling then giving cash.
• Mission impact: Specialized assets (e.g., medical equipment, vehicles, artwork) can directly support a nonprofit’s operations or programming.
• Liquidity planning and estate strategy: Non-cash gifts, including through donor-advised funds or charitable remainder trusts, can be part of tax- and estate-planning strategies.

Key tax rules and thresholds (current as of 2025)

• Qualified charities: You must give to a qualified organization (typically 501(c)(3) public charities). Verify status at IRS.gov or through the charity.[1]
• Holding period and deduction amount: For long-term capital gain property (assets held more than one year), donors who give to qualified public charities can generally deduct the asset’s FMV, subject to adjusted gross income (AGI) limits (commonly 30% of AGI for appreciated property given to public charities). If you’ve owned the property one year or less, the deduction is generally limited to your cost basis (what you paid) rather than FMV.[2][3]
• AGI limits and carryover: Deduction limits vary by asset type and recipient (e.g., public charities vs. private foundations). Unused charitable deductions can typically be carried forward up to five years.[2][3]
• Special rules for vehicles: If a charity sells the donated vehicle, your deduction is limited to the amount the charity receives from the sale (reported by the charity). If the charity uses the vehicle in its mission or gives it to a needy person, you may deduct FMV. See IRS guidance on gifts of vehicles, boats, and airplanes.[4]

Documentation and reporting you must know

• Written acknowledgment for donations over $250: The IRS requires a contemporaneous written acknowledgment from the charity for any single contribution of $250 or more. This acknowledgment must state whether you received any goods or services in return and provide a description. Do not claim the deduction without it.[1]
• Form 8283 (Noncash Charitable Contributions): If the total deduction for noncash gifts claimed on a return is more than $500, you must complete Section A of Form 8283 and attach it to your tax return. For contributions with a claimed value over $5,000 (other than publicly traded securities), you generally must obtain a qualified appraisal and complete Section B of Form 8283; the appraisal summary must be attached to your tax return. See Form 8283 and its instructions for full details.[5]
• Qualified appraisal: Required for most noncash donations valued over $5,000. The appraisal must be done by a qualified appraiser and meet IRS standards (see Publication 561).[2]
• Substantiation for donated stock or securities: Transfers of publicly traded securities are generally easier to substantiate if transferred electronically to the charity’s brokerage account. The charity’s acknowledgement should state the number of shares and the date of the gift.

Valuing donated property (practical guidance)

• Use the concept of Fair Market Value (FMV): FMV is the price a willing buyer would pay a willing seller, with neither under compulsion and both having reasonable knowledge of relevant facts. Publication 561 explains valuation methods for common property types (market data, replacement cost, appraisals, etc.).[2]
• Marketable assets: For publicly traded securities, FMV on the date of donation is usually the average of the high and low trading price on that date or as directed by IRS guidance. For easily marketable items, use comparable sales.
• Unique or hard-to-value assets: For art, collectibles, privately held business interests, or real estate, obtain a written qualified appraisal when the claimed deduction exceeds $5,000. Document comparable sales, provenance for art, and any restrictions on use.

Common donation scenarios and tax outcomes (examples from practice)

• Appreciated publicly traded stock held >1 year: A donor who transfers $10,000 of stock bought years earlier (now worth $10,000) to a public charity may deduct the $10,000 FMV and avoid paying capital gains tax on the appreciation.[2]
• Closely held business equipment: Donating used machinery to a vocational school may produce a deduction equal to FMV if held >1 year, but the charity’s ability to use or sell the equipment affects logistics and valuation.
• Real estate: Gifts of real property commonly require title review, environmental due diligence, and a qualified appraisal. Some charities will not accept property with liabilities (e.g., contaminated land). Work with the charity and your tax advisor before gifting real estate.
• Artwork and collectibles: These often need appraisals and careful documentation. Deduction limits and substantiation rules apply.

Mistakes I see frequently (and how to avoid them)

• Failing to verify charity status: Always confirm a recipient is a qualified organization via the IRS Tax Exempt Organization Search or ask the charity to provide validation.[1]
• Skipping Form 8283 or appraisal: Not filing Form 8283 or attaching required appraisals can jeopardize the deduction. For significant gifts, obtain the appraisal before filing your return.[5]
• Overstating value: Inflated valuations invite audits and penalties. Use defensible methods and professional appraisers for high-value gifts.[2]
• Donating property with hidden liabilities: For real estate or business assets, do due diligence—charities may refuse property with environmental or title problems.

How to donate step-by-step (practical checklist)

1. Identify the asset and its holding period (short- vs. long-term).
2. Confirm the charity will accept the asset; request acceptance and any guidelines the charity requires.
3. Get an estimated FMV. For items >$5,000, hire a qualified appraiser before filing taxes.[2]
4. Transfer the asset correctly: use electronic transfer for securities, execute proper deeds for real property, and arrange physical delivery for equipment.
5. Obtain a contemporaneous written acknowledgment from the charity for donations ≥ $250.[1]
6. Complete and attach Form 8283 to your return when required, and keep records of purchase price, appraisal, and correspondence.[5]
7. Consult your CPA or tax advisor to confirm deduction limits, potential state tax issues, and carryover planning.

Alternatives and planning techniques

• Donor-Advised Funds (DAFs): You can donate appreciated securities to a DAF, take an immediate charitable deduction, and recommend grants to charities later—especially useful for timing deductions in high-income years.
• Charitable Remainder Trusts (CRTs): CRTs can convert appreciated assets into an income stream while providing an eventual gift to charity and potential income-tax benefits.
• Gifting through estate planning: Consider gifts in wills or beneficiary designations for non-cash assets—a common strategy to create a charitable legacy.

Recordkeeping and audit readiness

Maintain a file with:

• Written acknowledgment(s) from the charity for each gift ≥ $250.[1]
• Receipts, appraisal summaries, Form 8283 copies, and correspondence with the charity.[5]
• Proof of transfer (brokerage statements for securities, deed recordings for real estate, bills of sale for equipment).

Internal resources and further reading

• See our practical how-to on documenting charitable noncash donations for taxes for detailed recordkeeping steps and sample forms: How to Document Charitable Noncash Donations for Taxes. (internal link)
• For valuation and appraisal basics, read Valuing Noncash Charitable Gifts: Reporting and Appraisal Basics. (internal link)
• For timing and records-focused strategies to maximize deductions, see Maximizing Charitable Deductions: Records and Timing. (internal link)

(Links above point to related FinHelp guides for donors and advisors.)

Final professional tips and disclaimer

• Always consult a qualified tax advisor or attorney before completing a significant non-cash gift—complex assets (real estate, closely held stock, artwork) often need legal review and appraisal.
• In my practice as a CPA and CFP®, simple mistakes—missing Form 8283, failing to get a required appraisal, or gifting property the charity then must reject—are the most costly. Plan in advance, and keep good records.

This article is educational and not tax or legal advice. For authoritative IRS rules and the most current thresholds and procedures, consult IRS Publication 526 (Charitable Contributions), Publication 561 (Determining the Value of Donated Property), Form 8283 instructions, and the IRS charitable contributions webpages:[1][2][5][3][4]

References

1. IRS, Charitable Contributions (overview): https://www.irs.gov/charities-non-profits/charitable-contributions
2. IRS, Determining the Value of Donated Property (Publication 561): https://www.irs.gov/publications/p561
3. IRS, Publication 526, Charitable Contributions: https://www.irs.gov/publications/p526
4. IRS, Gifts of Vehicles, Boats, and Airplanes: https://www.irs.gov/charities-non-profits/charitable-contributions/gifts-of-vehicles-boats-and-airplanes
5. IRS, About Form 8283, Noncash Charitable Contributions: https://www.irs.gov/forms-pubs/about-form-8283

Professional disclaimer: This content is educational and general. It does not replace personalized tax, legal, or financial advice. Consult your CPA, tax attorney, or financial advisor before making significant charitable gifts.