Real Estate Gifts For The Layperson Allen Thomas, J.D., CFRE, CAP Vice President of Advancement

1. Real Estate Gifts For The Layperson Allen Thomas, J.D., CFRE, CAP Vice President of Advancement The American College

2. What we hope to discuss today • How can we prepare our charity to feel secure in accepting real property donations? • What are the techniques, approaches and processes that will yield the greatest return from real estate gifts? • Are we approaching each real estate gift with a donor-centered perspective to maximize the benefit for our donor?

3. Why do we miss real estate gifts? • Our charities are risk averse and avoid such gifts. • Not only are real estate gifts complicated, but they take time and effort to complete. • Perhaps we have not invested the time and effort to create a real estate friendly infrastructure.

4. We must strategically position our charity for gifts of real property • A successful real estate giving program requires a team of advocates to make such gifts possible. • The real estate gift visionary will construct a program through consensus building at both the conceptual level and on a case by case gift basis. • Initiate a dialogue at your charity about what your agency can accomplish through real estate gifts.

5. We must strategically position our charity for gifts of real property • Is your Development Office prepared for real estate gifts? • Is your President or Executive Director supportive of these gifts? • Is your CFO and Finance Group aligned? • Do you have a champion on the Board? • Do you have a creditable real estate advisor?

6. Start with a strategic plan • The strategic plan is the operating guide for the process of reviewing, analyzing, decision-making and accepting or rejecting real estate gifts. • Without a strategic plan the decision-making policy can become one of “Accept Everything, Accept Nothing or a Prudent Procedure for reviewing the real estate gift as an OPPORTUNITY!

7. Do not open the gate for the next “real estate Trojan Horse”

8. The strategic plan will identify the necessary resources in preparation for real estate gifts • Focus should be to establish the infrastructure and resources to analyze and process the proposed real estate gifts.

9. An infrastructure should be established for processing gift opportunities • Adopt a Gift Acceptance Policy • Establish an internal staff committee • Assemble a resource team to process gifts of real property

10. Adopt the Gift Acceptance Policy • Most basic of objectives is to evaluate the impact of the real estate donation to the organization and the donor. • Remember every piece of real estate is unique! The Gift Acceptance Policy becomes the “Fiduciary Screen”

11. The Gift Acceptance Policy - specific parameters to follow: • Consideration should be given to marketability. • Existing and potential liabilities of the real estate gift should be considered and identified. • Donor should be responsible for all expenses associated with acceptance and liquidation of real estate. • An operating and/or exit plan should be developed.

12. Establish an internal staff committee • Checklist utilized by staff in preparing analysis and recommendation • A financial proforma should be developed regarding “what if “ financial scenarios. • Proforma should be presented to acceptance committee • To review all potential real estate gifts and present recommendations

13. Assemble a resource team • Real estate advisor/broker • Real estate consultant • Real estate appraiser • Real estate legal counsel • Facility/property manager

14. Property valuations and appraisals • Donor is required to have a qualified appraisal. • Your charity may also want to have an appraisal. • A broker opinion of value is very valuable.

15. IRS requirements • The donor must prepare and submit IRS Form 8283 with tax return. • Your charity must sign the Form 8283 acknowledging receipt of the property. • If your charity sells the property within 3 years, you must file IRS Form 8282.

16. Analyze carrying and disposition costs • Real estate taxes and insurance expenses. • Utility expenses such as electric, water, sewer. • Cost of third party property management. • Maintenance expenses. • Real estate brokerage. • Legal expenses.

17. Market your real estate program to selected audiences • Your marketing message should be communicated with clear and simple materials. • These should be circulated internally to important members of your senior management team and edited by them. This will create understanding and ownership. • Your traditional planned giving constituency may not have any idea that real estate is a viable asset for gifting to your charity.

18. Market your real estate program to selected audiences • Market to a variety of professional advisors. • Approach the real estate brokerage community with your message. • Make presentations to Financial Planning Councils. • Similarly, approach the Trusts and Estates sections of the Bar Association. • Assertively promote the concept of real estate gifting.

19. Questions and Answers

20. Thank You! For More Information Contact: Allen Thomas, JD, CFRE, CAP Vice President of Advancement The American College 270 S. Bryn Mawr Ave. Bryn Mawr, PA 19010 Email: Allen.Thomas@TheAmericanCollege.edu