It’s a Brave New World: Charitable Gifts of SPACs, PIPEs and NFTs

One year ago, many of you probably didn’t know there was even such a thing as a Zoom consultant.  And you probably had also never heard of Special Purpose Acquisition Company (SPAC), a Private Investment in Public Equity (PIPE) or a NonFungible Token (NFT).  Your donors/clients not only expect you to know what these vehicles are, but how they can be used for charitable giving.  Charitable Solutions, LLC is actively involved with donations of and investments in SPACs and PIPEs with NFTs sure to follow.  So, what are these new vehicles?

Special Purpose Acquisition Companies (SPACs) are a resurgence of what used to be called “blank check” companies. These are shell companies formed for the purpose of taking an (as yet) unidentified target public. Once a SPAC goes public, individual investors are afforded an opportunity to get in on something a bit closer to the ground floor. When the SPAC identifies an acquisition target and the price of the stock (hopefully) rises, many of these early investors have a large gain – and a great donation opportunity!

Private Investment in Public Equity (PIPE) arrangements frequently occur in the SPAC world. These investments are made by institutional or accredited investors, usually before the SPAC goes public. The PIPE stock is then subject to restrictions on trading and transfer. These assets can be even better candidates for charitable giving, because of their often, ultra-low basis.

Nonfungible Tokens (NFTs) have been in the news constantly for the past few weeks. NFTs use blockchain technology, like Bitcoin and other cryptocurrencies, but are not tradeable like those coins. NFTs are unique and nontransferable. Instead, they have a blockchain-authenticated relationship with other objects (often online art or even Tweets). For example, the NFT tied to Twitter’s first Tweet was sold by founder Jack Dorsey for $2.5 million – which he pledged to charity. Can charities directly accept NFTs? And what can ownership of an NFT represent in terms of tangible value? These tokens represent yet another exciting development in the world of blockchain technology.

Presented by:  Bryan Clontz, Ph.D., CFP®, CAP®, Ryan Raffin, JD and Russ Willis, JD, LLM
This free session will provide a fuller description of each vehicle with a special emphasis on how they can be used for charitable giving.