Wealthy people may not be as “liquid” as you may think. The nature and location of their wealth can dramatically affect liquidity.
Elon Musk showed us this when he had to liquidate billions in Tesla stock and then rallied investors to support his takeover of Twitter. Holders of Berkshire Hathaway stock, for instance, in an almost cult-like behavior, rarely sell their shares even though they do not pay a dividend.
Why it matters: Knowing the nature of the donor’s wealth can help you construct your gift request.
- If they are a company founder, they likely have highly appreciated stock that makes for a tax-smart gift.
- If they are an elderly couple with multiple homes, they may want to gift a home to relieve the upkeep burden or consider a charitable gift annuity that will provide a high return and an upfront tax benefit.
Determining a gift ask is more than coming up with a number.