Today, charities are recognizing opportunities to solicit and receive charitable donations of non-cash property. While "non-cash" gifts may consist of nearly any kind of property, the most desirable property for a charitable organization is appreciated real estate, publicly-traded stocks and bonds, and collections of rare art objects. These "non-cash" properties have easily determined fair market values and may be quickly liquidated, or in some instances be retained for the charity's exempt purpose. The balance of this Alert will deal with non-cash donations of appreciated real estate.

As charities enhance existing community programs and expand services in response to emerging community needs, generous individuals are responding to requests for donations of appreciated real estate.

Why would anyone want to donate appreciated real estate to a charity? A good question.

Let's look at three (3) good reasons why individuals may wish to donate appreciated real estate to your charitable organization:

1.     Your charity is responding to community needs by promoting community cultural events and community resources. Your Foundation is active in community affairs, helps to make the community a great place to live, work, and raise families, to build businesses, and to otherwise engage in productive activities.

2.     The donor experiences a positive and vibrant community spirit and desires to sustain that spirit of community by making a tangible contribution to the organization (your Foundation) which is leading the way to a better community.

3.     The donor desires a charitable deduction but hesitates to donate cash or sell an appreciated asset (and pay the capital gains tax). The better alternative for the donor is to donate appreciated real estate and take a charitable deduction based on the current fair market value of the real estate and avoid capital gains taxes.

Soliciting appreciated real estate is one of the ways in which a Charity may develop resources to meet community needs. Not every piece of real estate is desirable, however, and the donor has the responsibility to obtain a qualified appraisal if the property is valued at more than $5000.00. Every charity should be prepared to receive non-cash gifts. This means that your Board must examine and approve a non-cash gift policy which spells-out the procedures for soliciting and receiving donations of appreciated real estate. Call us for assistance.

We're experienced in preparing non-cash gift policies and guidelines, and in handling gift transactions of appreciated real estate to charities.