December 4, 2009
Sometimes owners of conservation-worthy land are reluctant to make a gift of that land to a non-profit organization, such as their alma mater. Their conern is that the non-profit will be bound by its fiduciary responsibility to sell the land at fair market value, even if that means the land might someday be developed. A solution to this situation is for the private owner to first donate a conservation easement on the property to a land trust or to an appropriate unit of government, and then to donate the fee interest in the land to the charity (or charities) they wish to support.
Here is an example of such an arrangement as reported by the Partnership for Philanthropic Planning:
“Dr. Herald Nokes and his wife, Donna, donated 1650 acres of their forest land in central Idaho to the University of Idaho by placing a conservation easement on the land in favor of the Idaho Department of Lands, and then donating the fee title to the University subject to a retained life estate. Total value of the gift was just under $11 million. UI will use the property as an outdoor classroom/laboratory and for field research. Ongoing selective harvesting of the trees will provide a continuous source of revenue to help underwrite the maintenance and use of the land.”
I’m aware of a New England family who decided to first gift a conservation easement on their farm to a local land trust, generating a tax deduction of over $1 million. They then gifted the fee-restricted land to the husband’s alma mater, generating an additional charitable contribution of over $2 million. Had they donated the land unrestricted to the college their total tax deduction would have been about the same, but they wouldn’t have had the satisfaction that the land would be forever protected from development. The College, on the other hand, received a gift of land worth over $2 million which they were able to market to a farm family looking for expansion agricultural land. The College would never have received a gift a tall were it not for the conservation easement.
The Land Trust Alliance reports that there are currently at least 1700 land trusts in the country. These land trusts, in addition to units of government, can hold conservation easements. Properly structured, the use of conservation easement can enable gifts and land protection that meet the objectives of all involved.
For information on how Bidwell Advisors can help address your land conservation issues, click here.
November 23, 2009
I attended a recent meeting of the Planned Giving Group of New England in Boston. It was “Real Estate Theme Day” at PGGNE, with presentations on real estate gifts by a team from the University of Pennsylvania, and by Harry Estroff, Real Estate Gift Manager at The Nature Conservancy. Coincidentally, on the same day, my colleague Chase Magnuson was presenting on real estate gifts at the National Capital Gift Planning Council in Washington, DC. Chase joined the development staff at George Washington University to develop a comprehensive real estate gifts program for the University, drawing on his background as founder and principal of Real Estate For Charities.
In February, I’ll be presenting at PGGNE on Real Estate Gift Basics. I’ve also been asked to make presentations on real estate gifts in the coming months at the Chicago Planned Giving Council, the Minnesota Planned Giving Council, and the Greater Cincinnati Planned Giving Council.
Why all the attention to real estate gifts?
Here’s my short list of reasons that development offices across the country are turning more of their attention to real estate gifts:
October 16, 2009
Research and anectodal reports point to one marketing theme that tends to work better than all others when it comes to attracting gifts of real estate to a non-profit organization. It isn’t an emphasis on the tax deductions that can be generated by real estate gifts. And it isn’t an appeal to the wonderful mission and good works of the organization.
What is it? It’s an appeal to the fact that many aging property owners find the continued ownership and management of properties (especially second or third or fourth homes) burdensome and worrisome.
Such property owners are often eager for ideas on low-hassle ways of disposing of their real estate, especially when it furthers their charitable objectives and serves their tax planning needs.
So, rather than run magazine and newsletter advertisements that say “Give us your real estate because we’re a wonderful organization and will do good things with your gift,” try something like this:
“If you’re approaching a time in your life when you need to make decisions about parting with a property that has become more burdensome than enjoyable, give us a call. We have ideas that might work for you and work for us.”
For information on how Bidwell Advisors can help develop a real estate gifts marketing program, click here.
September 18, 2009
It always surprises me when I learn that a non-profit client uses estimates of a prospect’s real estate wealth as one of the indicators pointing to the size of the cash gift they will solicit. I recently talked with a development officer who was aware that a prospect owns four pieces of property with an estimated total value of about $5 million. He estimated the total net worth ofhis prospect at about $10 million. He then laid out a plan for asking that prospect for a $2 million cash gift.
Why, I asked him, didn’t you just ask your prospect for one or two of her properties, which she appears to not be using as she ages? Well, I’m just not comfortable talking with folks about the complexities of real estate, he responded.
To which I say: It’s time to get comfortable with at least introducing the real estate topic, knowing there’s expertise waiting in the wings to help you out.
This points to the need for many organizations to think differently about their prospect research. I contend that organizations should be mining their data bases and their collective organizational histories to identify prospects who fit this pattern: own multiple pieces of property in multiple states; are age 65 or over; are charitably inclined to your organization. When this fact pattern is used for screening, very strong real estate gift prospects emerge that in many cases may not have even been rated using traditional prospect rating systems. Identifying real estate gift prospects requires a different approach to thinking about wealth and thinking about donor motivations.
We know from a report on second home ownership prepared by the National Association of Realtors in 2005 that:
Fundraising consultants can provide a valuable service to their clients by reminding them to turn their attention, and that of their researchers, to the real estate holdings of their donor prospects. Often, friends of the organization that are short on cash and appreciated securities can realize their charitable objectives through real estate gifts they had not previously considered.
For more information on how Bidwell Advisors can help fundraising consultants to better advise their clients, click here.
July 23, 2009
As the effects of the deteriorating economy ripple through development offices of non-profit organizations of all sizes and shapes, increasing attention is being paid to the potential of real estate gifts. This shift in attention is due to several factors:
July 14, 2009
More and more non-profits are becoming aware that they are receiving fewer real estate gifts than some of their peers. They are realizing that other organizations have enjoyed considerable success in attracting a portion of the estimated 30 percent of the nation’s private wealth that is in real estate holdings.
In some cases, these organizations have responded by transitioning from a program that occasionally accepts gifts of real estate in various forms, to one that seeks to make such gifts happen. This transition needs to occur, of course, while taking appropriate precautions to manage the various types of risk (environmental, liquidity, holding cost) associated with owning real estate.
A review of the experience of those non-profits that have successfully made this transition reveals several important steps in developing a more active and lucrative real estate gifts program.
Successful programs tend to have clear gift acceptance policies and procedures governing real estate. These policies assure that everyone in the institution is on the same page regarding the types of properties (residential, commercial, farms and ranches, etc.) that will be accepted and the gift structures (CRTs, CGAs, retained life estates, etc.) that can be employed. These policies also tend to establish minimum gift amounts that take into account the often time-consuming and costly process of structuring, analyzing, and closing gifts of real estate. (more…)