More Giving with Complex Assets

DALLAS - Karla D'Alleva Valas, a managing director of the Complex Asset Group for Fidelity Charitable, says she cringes during her church's services when congregants drop envelopes of what she assumes is cash into the donations basket. Why? Cash is expensive, she told advisors at the Women Advisors Forum on Thursday.

But that’s not the only reason D’Alleva Valas would rather see philanthropic impulses be fulfilled with a transfer of complex assets instead.  “That’s what people have,” she says citing Fidelity’s 2012 Charitable Advice & Giving study. According to the study of wealthy individuals – with income of at least $100,000 and at least $1 million in investable assets – who work with an advisor, 34% have the bulk of their net worth in privately held businesses, something other than cash or publicly traded stocks.

Complex assets include private company stock, limited liability company and limited partnership interests, real estate, restricted stock, oil and gas royalty interests, and certain alternative investments.
Transferability, liquidity and timing, valuation and risk management are the key concerns for donors and advisors dealing with a donation of such assets.

Previously, strategies for giving to charities through complex assets have been “overlooked, intentionally or otherwise,” whether it is because advisors don’t have time, the lawyers don’t have time or simply because it’s easier to give something that’s less complicated, she says. “Charities ask for cash so people give away cash,” D’Alleva Valas adds. “But charities are also starting to wise up and ask for [complex assets] because that is what people have to give.”

And because Americans are holding more of their value in these types of assets, more advisors are talking with clients about using complex assets for philanthropic giving making these strategies more well-known, she says. “More people are talking about it and more advisors are educating their clients about it,” D’Alleva Valas says.

And that’s a good thing for clients and their advisors according to D’Alleva Valas. “They can’t afford not to,” she says. “And advisors can’t afford to not be talking about philanthropy with their clients.”

Which is another point D’Alleva Valas, and others, make. Philanthropy, and talking about it with clients, represents an opportunity for advisors. “Americans are philanthropic,” D’Alleva Valas says. “Advisors are the driving force in getting more money to the organizations their clients care about at a lower cost.”