Three Reasons to Engage Your Board of Directors About Real Estate Gifts

By Dennis Bidwell

February 2016

As I work with non-profits around the country, helping them attract and structure charitable gifts of real estate, I am finding more and more of them choosing to engage their board of directors in the real estate gift process. Here’s why.

First, a very large majority of real estate donors fit this profile: people over 65 years of age who own multiple properties (generally residential), often scattered geographically, whose children (if they have any) are otherwise taken care of in their estate planning, and who have a charitable interest in the institution. (See this article for more on this.) In my experience, that’s not a bad description for many a trustee at a college or university or hospital or museum, etc. For this reason, I’m seeing presentations made at board meetings, or at development committee or campaign committee meetings, simply because that’s where some of the very best prospects for such gifts are gathered in one place. At such meetings I’ve sometimes been asked to present a hypothetical case study whose fact pattern was eerily similar to the circumstances of a particular board member in attendance. Furthermore, once such a board member (or former board member, or advisory committee member, or long-time close friend of the institution) recognizes the reasons for gifting, rather than selling their unused vacation home, they often are more than happy to have their gift experience broadcast far and wide as an example of giving real estate.

Planned giving pioneer John Brown was fond of saying: “At the table of every Board meeting sits at least one potential real estate gift. It’s just that no one has ever connected the dots.”

Second, board members and other close friends of an organization often travel in circles where they’ll encounter people contemplating disposing of an unused second home, or an investment property. When a trustee of your organization, in a cocktail party conversation, learns that his or her friend is, say, getting ready to put their Nantucket home on the market, it’s important that at that moment they suggest that rather than immediately listing the property, would they mind a brief conversation with someone in the development office about a more tax-advantageous way of parting with the property that would also provide enormous benefit to the institution? The trustee need not be an expert on the tax treatment of various giving vehicles. But it is important that they recognize an opportunity staring them in the face and be ready to suggest a friendly next step.

And finally, successfully incorporating real estate gifts into an organization’s development program depends on institution-wide buy-in. It’s important that revised gift acceptance policies (see article here on gift acceptance policies for real estate gifts) that incorporate best practices regarding real estate gifts be run past the board not just for purposes of pro forma approval, but also because board members need to understand the magnitude of the real estate opportunity and why the organization has decided to pursue real estate gifts. Also, should there be resistance to real estate gifts in, say, the finance office or the office of the general counsel, it’s important that those offices understand that the Board of Directors has endorsed the initiative.

Real Estate Gift Readiness Audit

By Dennis Bidwell
June 2015

I have recently been asked by several clients to help them conduct an “audit” of their institution’s readiness to actively pursue real estate gifts.

At the end of this audit exercise, sometimes the conclusion is: “We’re just not ready to tackle real estate gifts. We’ll come back to it in another year.” Increasingly, however, the response is: “We’re leaving so much wealth on the table by not pursuing real estate gifts that we’ve decided to build up our capacity in this area now.”

I hope this audit template is of use to your organization.

Institutional support
1. Is pursuit of real estate gifts (with appropriate attention to minimizing risk) supported by your VP of Development? By your CFO? By your general counsel or equivalent?
2. Is top management at your organization familiar with the real estate gift experience of peer institutions?

Gift acceptance policies and procedures
1. Do your gift acceptance policies address the forms of real estate gifts you will and won’t accept, and under what circumstances?
2. Do you have a policy on real estate gift minimums?
3. Do you have a clear assignment of responsibility for handling the different stages of a real estate gift: initial conversations, detailed gift structuring, gift acceptance letter, due diligence, gift closing, interim management, sale of property?
4. Would you describe your policies as a balance between “donor-friendliness” and “institutional protection”?

Training
1. Do your gift officers have a basic familiarity with different types of real estate gifts and the situations for which they are appropriate?
2. Do your gift officers have a comfort level with discussing/initiating real estate gifts with donors?
3. Are your gift officers expected to bring forward at least one real estate gift scenario every six months?
4. Do your board members (or development committee members) understand enough about real estate gifts to recognize an opportunity when it presents itself at a cocktail party?

Marketing
1. Do you promote your interest in real estate gifts prominently on your website?
2. Do you market your interest in real estate gifts in your newsletters/magazines/etc.?
3. Do you provide information about real estate gifts at member/alumni gatherings?
4. Does the content of your marketing emphasize a “problem solving” approach?

Prospect research/outreach
1. Have you attempted to identify prospects who specifically fit the profile of a real estate donor?
2. Do you have a plan to reach out to identified prime prospects for real estate gifts?

Campaign work (where appropriate)
1. Have you built real estate gifts into your campaign strategy and structure from the start?

Real Estate Gift Training for Development Officers: One Part of Ramping Up Real Estate Gift Activity

by Dennis Bidwell
March 2013

Over the years I have been asked to provide training on one aspect or another of real estate gifts for numerous institutions. I’m always pleased to do so, because I enjoy helping more and more development professionals become comfortable initiating conversations with prospects about their real estate holdings and the philanthropic capacity represented by those properties.

But I’m not always convinced that such training sessions, in and of themselves, are all that helpful. Why?    

Because, if not part of an ongoing effort to attract, structure and close real estate gifts, a training session on real estate gifts can easily become just one more set of notes and one more PowerPoint printout that goes into the files of a busy gift officer.

On the other hand, I have seen numerous instances where such training sessions proved to be quite effective.  At the organizations where such training sessions really paid off (meaning they led to completed real estate gifts), the training sessions were part of a sequence of events that typically include the following:

  • Review of gift acceptance policies and procedures, incorporating best practices regarding real estate gifts. Before training gift officers about real estate gifts, it makes sense to be totally clear on what sorts of real estate gifts the organization will and will not accept, and to be clear on the who-does-what within the organization when a gift possibility materializes.
  • A fresh look at marketing approaches. Real estate gift inquiries rarely materialize out of thin air. They are usually prompted by an organization letting its constituents know that they are eager to talk to people about their real estate and its gift possibilities.
  • Prospect research. Because we know so much about the profile of a likely real estate donor, it makes sense to focus some prospect research activity on the task of identifying good candidates for real estate gifts. Often, the prospects that surface through this process are prospects that hadn’t previously appeared on an organization’s radar screen.
  • Gift officer training. Good gift officer training can: help staff (and board members) identify a potential real estate gift situation that is staring them in the face at a cocktail party; provide an overview of the different structures appropriate for different donor situations; help develop a comfort level with initiating a real estate conversation as part of a donor visit.
  • Coaching. Training sessions can really pay off when combined with the ongoing availability of a consultant or coach who can offer technical support and strategizing advice to a gift officer starting to work with a potential real estate donor. Some organizations have taken this a step further and required all gift officers to be prepared at least twice a year for a conversation about a specific possible real estate donor and their situation.
  • Transaction assistance. Some organizations have the capacity in-house to handle real estate gift transactions, start to finish. Others need to identify the outside resources that can be on-call when real estate gift situations arise.
  • Metrics.  I am aware of a few development shops that have included “real estate gift conversations” and “real estate gift proposals submitted” in the metrics they use in evaluating gift officer performance.

The point here is that real estate gift officer training is a necessary, but not in and of itself a sufficient, step in increasing the quantity and the quality of the real estate gifts being accepted by a non-profit organization. The real payoff comes from the carefully designed steps that precede, and that follow, gift officer training sessions.

Real Estate Gifts: Why, and How, to Pursue Their Largely Untapped Potential in Difficult Economic Times

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:

  • With growing liquidity concerns in most households, cash gifts – current or deferred – are becoming harder and harder to come by. This is causing development professionals to turn more of their attention to the non-cash assets of their donors and prospects, particularly real estate assets.
  • Real estate assets comprise over 35% of the assets of U.S. households. Yet only about 3% of charitable giving in recent years has come from real estate gifts. Development offices are increasingly recognizing the need to go where the wealth is – the largely untapped potential of real estate.
  • More attention is being paid to the experience of those non-profits that have consistently attracted large numbers of substantial real estate gifts. A survey conducted by the National Committee on Planned Giving, published in the Fall 2008 issue of The Journal of Gift Planning, reported that 13% of institutions responding received over 10% of their total contributions as real estate gifts over the previous three years, as measured in dollars.
  • The collective experience of institutions that have enjoyed success in pursuit of real estate gifts has led to an increasingly accepted body of “best practices” that permit the opening of the doors to real estate gifts while carefully managing and minimizing the potential risks of real estate.
  • Institutions at one stage or another of campaigns – planning phase, quiet phase, or those that have gone public and are concerned about hitting their targets – are increasingly turning their attention to the potential of real estate gifts. Indeed, there is evidence that the methodology for many campaign planning/feasibility studies in the future will devote more explicit attention to the role of real estate gifts in campaigns.

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