By Dennis Bidwell
I believe that increases in real estate gift activity can be explained by several factors.
I think more non-profits have opened their doors to real estate gifts, in many cases actively marketing their interest in real estate gifts, because long-standing resistance to real estate gifts has been fading away. Why the more open attitude in these non-profits? It’s in part due to a recognition that there are accepted and proven best practices for real estate gift acceptance policies and procedures. I think it’s also due to the fact that more attention at professional conferences, and in journals, and on list serves, is being devoted to real estate gifts.
Another factor, at least at some institutions, is that key personnel who embodied an organization’s cautious attitudes toward real estate – perhaps a chief financial officer, or a general counsel – have retired or otherwise moved on. In many organizations there is the lore of the “horror story” real estate gift – the property with uninvestigated underground fuel tanks, the property with a distant cousin still owning a one-eight interest, etc. – that has formed the basis of turning away from real estate gift possibilities. Quite often I’ve seen attachment to that lore dissipate with the change of personnel over time.
And then there’s the simple fact that as organizations see their peer institutions raising substantial funds through real estate gifts, they begin to ask why their institution is leaving dollars on the table by not accepting real estate gifts.
I’ve also seen that more and more non-profits, as they contemplate the next large capital campaign, realize that next time around they’ll need to be going back to their donors armed with some different kinds of asks, and often at the top of that list is real estate.
Yet another ingredient in the changing attitude toward real estate gifts is that more non-profits are better understanding the motivation of real estate donors, and are doing a better of job marketing to those motivations. Specifically, as it’s understood that many owners of multiple properties are attracted to the prospect of unburdening themselves of the hassles and expense of continued property ownership, and turning the marketing process over to someone else. Marketing efforts that recognize this motivation – in addition to the tax benefits of real estate giving – can be quite successful.
And underlying all of this is the increasingly understood fact that the largest single category of household wealth in the United States – larger than retirement funds, larger than stocks and bonds held outside retirement funds, much larger than cash – is real estate. Though different data sets yield somewhat different conclusions, by most accountings private real estate wealth accounts for 35% to 40% of household wealth in the United States. (Cash and cash equivalents? About 15%)
Taken together, I think these various factors will continue to have more and more development operations opening their doors to real estate gifts, knowing that accepted due diligence practices and reasonable gift minimums will screen out the problematic gifts and allow focus on the truly promising real estate gift opportunities.