A Hidden Gem for Fundraising Success: Gifts of Real Estate

Which gift would accomplish more good for your charity’s mission: $100,000 in cash or the gift of a single-family home valued at the median sales price in your state?

In all 50 states your answer should be the gift of real estate. And if commercial property is involved, the decision is not even close. The gift of property will have a much larger impact, yet many nonprofits shy away from this type of gift because of its perceived complexity.

The good news? With the right team at your side, gifts of real estate can be highly rewarding for both the donor and your nonprofit.

Why Real Estate Gifts Matter

Although large cash donations are fantastic, a gift of real estate can offer greater value, particularly if the property has appreciated over time. When donors give property rather than liquidating it for cash, they may receive tax benefits, such as avoiding capital gains taxes and an income-tax charitable deduction for the fair-market value of the property.

Yes, the process is more complex than simply writing a check, but it doesn’t have to be intimidating. Understanding the key players and steps involved can make it all manageable.

Key Parties Involved in a Real Estate Donation

Navigating a real estate gift requires working with several experts to ensure the process runs smoothly and all legal, financial, and environmental concerns are addressed. Here’s a quick breakdown of everyone who should be involved.

• Appraiser: The donor must obtain a qualified appraisal of the property to determine its fair- market value. This appraisal determines the tax implications and ensures your organization understands the value of the gift.
• Environmental Inspector: Environmental due diligence is crucial, especially with land, commercial, or industrial properties. An environmental inspector assesses the property for any potential environmental issues, such as contamination, which could affect its value or present liability risks.
• Attorneys for Both Parties: Legal counsel is essential for both the donor and the nonprofit to ensure that the gift is legally sound and that any potential liabilities or tax implications are fully understood and addressed.
• Title Company: A title company will verify that the title to the property is clear of any liens or other claims, ensuring the transfer can be completed without legal issues arising later.
• Trustee and Trust Financial Advisor (for charitable remainder trusts): If the real estate is being donated through a charitable remainder trust (CRT), a trustee and a trust financial advisor will be involved. The trustee manages the trust, while the financial advisor helps invest the proceeds from the eventual sale of the property, ensuring that income and growth are generated for both the donor and the charity.

Staff Training: Empower Your Team

Many nonprofits miss out on real estate gifts simply because their fundraising teams aren’t familiar with how these donations work. A consultant can provide essential training for your staff.

Identify Prospects for Real Estate Gifts: Not all donors will be the right fit for gifts of real estate, but identifying and engaging potential prospects is key.

Educate Donors about Real Estate Giving: It’s important to communicate the benefits of real estate gifts in a clear and compelling way. Focus on the mission first and the transformation the gift can generate. Training can empower your team to discuss real estate donations confidently with potential donors.

Handle the Process with Confidence: From the initial conversation to finalizing the gift, equip your team to guide donors through the process, making donors feel secure and appreciated. Position your team as trusted philanthropic advisers.

Navigating the Process

Dealing with multiple professionals and managing the logistics of a real estate donation can overwhelm the donor and your organization. But an experienced partner like The Angeletti Group can add value by managing the gift process and acting as a liaison between all parties. Expect a consultant to accomplish three major tasks.

• Coordinate the Key Players: From the appraiser to the environmental inspector, to the attorneys and title company, a consultant ensures all parties are on the same page and that the donation process is streamlined. This takes the burden off your nonprofit’s shoulders, so you can focus on what you do best—building relationships with donors.
• Navigate Legal and Financial Requirements: Real estate gifts come with additional paperwork and legal requirements. An experienced consultant helps ensure all documents are in order, reducing the opportunities for delays or legal complications.
• Advise on the Best Giving Strategy: Not all real estate gifts are created equal. A consultant can help the donor and your nonprofit structure the gift to meet various goals. Some popular ways to give real estate include:
  • An outright donation or gift via a will
  • As part of a charitable trust or gift annuity that provides income to the donor, before benefiting your nonprofit
  • Selling part of a property to your charity and donating the other part
  • Giving a house to your charity but retaining the right to live in it for the rest of the donor’s life
  • Some combination of these techniques

The gift might even figure in a donor’s legacy to family members, and gifts of commercial property can assist companies or family businesses in ways few executives or owners think of.

Having a partner to consult with through the process can be invaluable, especially for an organization inexperienced in accepting such gifts.

Make Real Estate a Core Part of Your Fundraising Strategy

Gifts of real estate can transform your nonprofit, but they require knowledge and coordination. With proper training and support, your team can unlock the potential of real estate donations and embrace this valuable form of giving. You’re not just receiving property. You’re accepting a part of a family’s dream and life and unlocking its potential to propel your nonprofit’s work.

Looking to start the conversation with your donors about real estate gifts but need help navigating the process? Contact The Angeletti Group today. We’re here to guide you every step of the way.