Attracting Real Estate and Other Non-Cash Gifts for Endowment and Stewardship

by Dennis Bidwell
October 2013

Land conservation organizations are especially well-suited to develop robust Legacy Giving programs (I prefer that term to “planned giving”)  emphasizing real estate gifts.  I truly believe that such efforts hold the prospect of long-term financial security and permanence for these organizations through endowments and stewardship funds. Why? Three reasons.

First, land trust can make a better argument than almost any other organization for having to be around forever. Land trusts, after all, exist on the premise that land owners can entrust to them the permanent protection of their land.  Asking for funds to assure the permanent stewardship of land matches up very nicely with the motivations of people wanting to assure a legacy – for themselves and for landscapes of meaning.

Second, with more U.S. household wealth in real estate than in any other asset class, property gifts of all sorts are an especially important component of Legacy Giving programs. And conducting real estate transactions is one of the core competencies of land trusts. When land trusts turn their real estate expertise to structuring and closing gifts of non-conservation real estate (think vacation homes, ski condos, apartment buildings, etc.), they have put themselves on a path toward long-term financial security.

Third, an essential feature of successful planned giving programs is the long-term cultivation of personal relationships with donors. In the course of working with property owners and other community members to bring permanent protection to land rich with history and meaning, land trusts develop especially close and trusting relationships.  These relationships often deepen over time, with the potential to produce enduring, sometimes transformational, gifts.

More and more land conservation organizations are learning to talk with donors about the whole menu of gift techniques – outright gifts, bequests, charitable remainder trusts, charitable gift annuities, retained life estates, fractional interest gifts, etc.  And they growing more skilled at discussing their donors’ whole range of assets – real estate of various types, securities, retirement plans, insurance policies, business interests, etc. – in order to help aging members and donors dispose of assets no longer needed. The result of this process of inquiry and problem solving many times results individuals and families realizing they have charitable capacity they never thought they had.  When this happens, it brings joy and satisfaction to all involved.

Case Study: Gift of Texas Ranch Subject to Retained Life Estate

Case Study: Gift of Texas Ranch Subject to Retained Life Estate
by Dennis Bidwell
June 2012

Take-aways from this gift scenario:

1.  A retained life estate gift can accomplish essentially the same charitable results as leaving a property by bequest, with two important exceptions:the owners are entitled to a current income tax deduction when they donate the property subject to a retained life estate (unlike a gift by bequest); and the donors can enjoy the satisfaction, and praise, for making the gift in their lifetimes, rather than such recognition coming posthumously.

2.  In the case of a property gift likely to generate a very large tax deduction, the donor can make fractional interest gifts over time, thus spreading out their tax deductions over sufficient time to enable use of such large tax deductions.

3.  The non-profit recipient of the gift, based in Virginia,  was able to assemble a team of experts to structure and close this gift in Texas.  Such expertise had its cost, but was well worth it in relation to the ultimate value of the gift.

George and Jennifer Jackson were owners of a 150-acre ranch in Karnes County, Texas, that they used on the weekends and as a base of operations for their frequent birding expeditions.  Their primary residence was on the outskirts of San Antonio.

Read more…

Combining Land Conservation with a Major Gift

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.