ABOUT REALTY GIFT FUND
To promote the charitable giving of real estate by accepting real estate gifts of any kind, anywhere…fixing or remediating assets for market, converting them to cash…and using the net proceeds to make grants to other non-profit organizations for current and planned gifts.
Through grants and educational efforts, Realty Gift Fund hopes to make a meaningful impact on charitable giving through gifts of real estate.
Realty Restoration Gift Fund is now Realty Gift Fund. Our new name reflects a broadened mission to seek and accept all types of real estate, not just environmentally impaired properties. We made the change at the urging of other non-profits who find all gifts of real estate too risky or in conflict with gift acceptance policies. We will continue to work with individuals and corporations to mitigate contaminated properties and return them to productive use. However, now all real estate is eligible as a gift to Realty Gift Fund.
RGF was founded by individuals who have served on many non-profit boards and who thrive on tackling difficult real estate problems. In 2017, over $400 billion was given to charities who relieve government from a wide array of programs that serve our communities. However, less than 2.0% of total giving came from gifts of real estate, despite the fact that over 40.0% of America’s wealth is comprised of this asset class; evidence that real estate is too complex or too risky for most non-profits to accept. The opportunity to lift philanthropy through charitable donations of all types of real estate has a special appeal to our problem-solving nature.
Yes. A charitable donation of real estate eliminates the tax burden on the gifted portion of the property. Any cash paid to or on behalf of the donor (say, to pay-off a mortgage) is considered the “sale portion” and that amount is taxed on a prorated basis. Outright gifts are 100% tax free and tax deductible.
We accept gifts of all types of real estate (except timeshares), including outright donations and bargain sales. Accepted properties shall be repaired to a market-ready state, then re-sold for cash. The bulk of net proceeds from transactions will be granted to charities our donors have recommended, to charities who referred the donor, or to charities RGF supports.
- an outright gift,
- a bargain sale,
- properties that need some repair,
- select contaminated properties that require mitigation,
- underperforming properties that require additional investment to improve its marketability, or
- properties encumbered with debt or, for other reasons, require a partial cash payment from RGF
Yes. RGF received its public charity determination letter from the IRS on September 18, 2001, and converted to a private operating foundation in 2017.
We are not geographically bound. However, our evaluation process will favor properties located in the U.S. and that can achieve substantial local community benefits.
Yes, we accept cash donations, stock donations and grants from donors who wish to support the growth of our model. All donations are tax deductible to the fullest extent allowed by law.
Absolutely. Charitable giving is universally inspired by the urge to “give back”, and many potential donors are owners of real estate. Individuals and corporations have struggled for years to link their appreciated real estate to their philanthropic goals. We are real estate and charitable giving professionals determined to bridge the barriers and support donors who are, at their core, philanthropists.
Yes, benefiting our communities is the ultimate purpose of philanthropy, so the gifts we accept are evaluated for their positive impacts on the RGF mission. The mission to release real estate into the charitable pipeline is ground-breaking, and our ultimate goal is to support other charities who are committed to preservation, redevelopment, job creation, affordable housing, and a spectrum of health, educational, social and faith-based initiatives.
Other than the gifts and grants we make, the bulk of our effort is to educate donors, their advisors and all nonprofits that real estate can be given in a safe and simple manner. Our goal is for charities to ask their loyal donor base for real estate in a proactive campaign in order to draw donors closer to the mission and to improve the quality of the proposed gifts.
The net proceeds from every gift are shared between RGF and other nonprofits. The amount granted to other nonprofits varies based on size and complexity of each donation. However, RGF has designed an efficient model in order to grant 90% to 97% of net proceeds to other charities.
Yes, we value strategic relationships with other nonprofit organizations and wish to assist their fundraising goals by strengthening their donor alliances. We understand the complexity of the subject and can supply educational materials, make presentations tailored to unique audiences, and provide analytic evaluations on a case-by-case basis.
Yes. Over 1.1 million public charities across America relieve government of providing essential services that benefit our communities in countless ways. We feel that by working closely with City, State and Federal agencies we can develop a team approach to efficient problem solving. Local, state and federal agencies own environmentally impaired properties, and can benefit from our risk management program by reducing environmental liabilities and placing impaired properties back into productive use.
There are six general steps that lead to a successful donation:
A Donor, Advisor or Nonprofit can initiate property donation to RGF. We are very interested in the donor’s goals and to provide information about the donation process. Please call or write us to get started.
With a general acceptance of assumptions and process, RGF will make an initial evaluation to test the suitability the property for the RGF program. Usually completed within 24 hours.
If the property passes the initial evaluation, RGF shall provide a Net Gift Estimate and a Draft Donation Agreement. The Net Gift Estimate tracks the donation and sale of the gift from start to finish, starting with initial assumptions and concluding with actual “net proceeds” that fund the nonprofit world.
When the Donation Agreement is signed, the donation process begins and Realty Gift Fund assumes responsibility for the process. Our pledge is to make charitable gifts of real estate simple and professional. Often the Donor’s only obligation is to secure the appraisal which is fundamental to the donor’s claim for a tax deduction.
The donation concludes with a typical real estate closing that includes all donation forms. Under an outright gift of real estate, the donor transfers title and receives a charitable deduction. Under a Bargain Sale Agreement, the donor transfers title, and receives a partial cash payment and charitable deduction for the difference between the current appraisal and the cash payment.
After the donation concludes, RGF positions the property for sale. This includes hiring a brokerage firm, and can include leasing, repairs, maintenance, capital investments or, if contaminated, undertaking the agreed remediation program. RGF then resells the property and distributes the net proceeds as grants to other nonprofits as recommended by the donor.
Learn more about us. Visit our web site then contact us directly using the information provided at “The RGF Team” tab. Let us learn more about you. Your goals and your property are unique and the RGF team is available to discuss the potential corresponding tax benefits allowed by the IRS. Whether it’s education, health, faith issues, the environment, or the social needs in your community, tell us what matters to you and we will strive to help. Along the way, we urge you to seek the advice of qualified legal and tax professionals.
IRS regulations and tax laws related to charitable giving and gifts of real estate falls into a specialized practice and each transaction will be unique. RGF urges all donors to obtain independent advice from qualified legal and tax professionals who will impartially evaluate the donor’s goals and interpret the impact of the IRS’ respective rules and laws.
In most cases there is no cost for an initial property evaluation. It is assumed that the donor has clear title to the property and that basic title, tax and property information is on hand.
The transfer process will vary, but a typical time frame is 45 to 90 days from the date of the agreement.
An outright gift of “clean” real estate will be resold for cash. Underperforming real estate will be improved to add value, and worn property will be repaired before these properties are resold. The bulk of net proceeds from all sales are granted to other charities. These may include charities the donor has recommended, charities who procured the donor, or charities RGF supports.
You can. However, a charity cannot be forced to accept a gift, and statistics show that most gifts of real estate are too complex or risky for most non-profits, whose boards have imposed strict limitations on what may be considered.
RGF seeks properties that are marketable once prepared for market, or that produce cash flow and can be prudently held until a sale is secured.
RGF looks at each property on a case-by-case basis. All types of property will be considered including agricultural, retail, office, industrial, hospitality, healthcare, single family and multifamily residential, and storage, to name the most common property types. Tell us what kind of property you own. The typical donation value of is approximately $500,000. We will consider value property that is lower and we have no maximum limit.
All real estate donations to RGF require an independent valuation (a “qualified appraisal”) in accordance with IRS Regulations, and the donor is responsibility to obtain this independent valuation. Every donor is urged to seek qualified legal and tax advice from qualified independent professionals to understand the value and timing of the donor’s tax outcome.
Our goal is to simplify the donation process. We require each donor to pay for the donor’s appraisal which can range from $500 to $2,500 for a typical property. The payment of other donation costs can be negotiated, but can include a title report, title insurance premium, recording fees, and miscellaneous fees. Property tax prorations for the current year to the date of closing can be the largest out of pocket expense. In many cases, the other donation costs and prorations can be absorbed by RGF.
RGF will payoff the debt on behalf of the donor. Any cash payment made to or on behalf of a donor, under a Bargain Sale, is subject to capital gain taxes and recaptured depreciation on a prorated basis. (see “Bargain Sale”).
The laws surrounding charitable deductions are understood by qualified legal and tax professionals, yet the personal circumstances of each donor will be unique and we urge all potential donors to seek independent qualified legal and advice. In our experience, the following generally applies:
The “fair market value” of the property less any cash payments made to or on behalf of the Donor, represents the charitable gift. A “qualified appraisal” determines the fair market value. A gift of a noncash asset is deducted from up to 30% of the donor’s Adjusted Gross Income. The IRS allows the tax deduction to be applied in the year of the gift plus 5 additional years, if needed, until the total tax deduction is exhausted.
Gifts of cash, including cash contributed to pay for remediation, may be applied against 60% of the donor’s AGI in each of the six years the deduction is available.
Corporations have a much simpler rule. The test for determining whether the fair market value is deductible is the same long-term capital gain standard, but the maximum deduction is limited to 10% of taxable income.
The cash value of the tax deduction is determined by multiplying the reduction of the tax payer’s Adjusted Gross Income by the tax payer’s ordinary income tax rate (including federal, state and other applicable taxes). Under a Bargain Sale, adding the cash payment to the cash value of the tax deduction roughly compares the total cash value of a Bargain Sale to the cash value of a straight sale, and reveals the power of a potential gift for the donor with philanthropic intent.
Yes, on a prorated basis, based on the amount of the cash payment to the fair market value. For example, if a partial cash payment to the donor is equal to 20% of the property’s fair market value, the donor will recognize roughly 20% of the taxes that would be owed under a conventional sale. Taxes associated with other 80%, the charitable gift, are eliminated. We urge donors to seek qualified legal and tax advice to understand the outcome of any donation and corresponding tax benefits.
Property restoration and resale will vary as a function of environmental and market conditions. After a risk management program has been finalized with all authorities and agreed to by the donor and RGF, the remediation process will begin. The time required to develop a risk management plan depends on the extent of the impairment. Once remediation has begun, asbestos and other onsite hazardous materials are often mitigated within 45 to 90 days. Soil issues may be resolved in a similar time frames at most sites. Groundwater measures may take longer depending on the extent of the contamination and follow-up testing. We will be marketing the property during the remediation process and would hope to re-sell the property as soon as the property is certified clean. The entire process can take a few months to over a year.
The donor funds the cost of remediation at the time of the donation. Thus, the donor assures that the value of a 'clean property' will ultimately benefit charitable organizations. The fair market value of the property in its post-remediation “clean” state plus cash contributed for remediation forms the basis for the tax deduction. There are tax rulings on deductibility of costs, who may take them and whether such costs are characterized as an expense or a capital cost. Each donor is urged to seek independent tax counsel for specifics as to their proposed gift.
RGF, in conjunction with a reputable environmental services company, seeks to secure protection for environmental liability associated with donated properties. Most often, the existing responsible entities will be offered an indemnity from the environmental services company. The environmental services company accepts this liability in writing and provides the donor an indemnification agreement and contractually accepts responsible for regulatory compliance in perpetuity. This protection covers known and unknown conditions present at the property at the time of the contract irrespective of the cost. An environmental insurance policy is also part of the transaction, and it provides a measure of financial protection for the anticipated compliance work at the property. In addition to the contractual transfer of the environmental liability, it is sometimes possible to obtain regulatory acknowledgment of the transfer of liability. This can be accomplished through the environmental service company's assumption of obligations under a formal agreement with the regulatory authorities.
Yes. RGF will consider a property at any point in the characterization/compliance assessment. The due diligence activities, which are performed at no cost to the donor, will yield an assessment that will provide an estimate of cost to remove the environmental liability and to satisfy oversight agencies.
Estimates and risk assessments are performed by a reputable environmental services company in conjunction with the environmental insurance company involved. The RGF program strives to establish a fixed price for the cost of the remediation at the time of donation.
The environmental services company will execute an indemnification agreement, which incorporates a contractual assumption of the environmental liabilities from the date of the agreement in perpetuity. Insurance protection is put in place for the duration of the anticipated remediation activities. These protections cover known and unknown conditions present on the property at the time of the transaction. The residual exposure should relate only to the viability of these two entities.
RGF will always endeavor to keep you informed of the status of the environmental work. Inquiries can be arranged on a periodic and scheduled basis with RGF.
During the due diligence process RGF and independent contractors or vendors with whom it works are bound by the terms of a confidentiality agreement. More importantly, from the point in time that the property is transferred to RGF, RGF has the same motivations as the donor. It is in RGF's interest to proceed with remediation and re-marketing in a timely and diligent fashion. In fact, one of our objectives is to enhance the reputation of the donor, accomplished by providing the widespread community benefits associated with a donation to the RGF.
To obtain the best result in furtherance of our charitable purposes, we work with prominent service providers and other professionals in evaluating a potential gift.
There are many ways we can work together with your non-profit, corporation or advisory firm. These may include referrals, gifts, grants, education, site evaluations, conference speakers, financial analysis, consultation, volunteers, resourcing, etc. Collaboration and cooperation are vital to our mission of transforming gifts of clean, underperforming or environmentally impaired real estate into diverse community benefits and grants to other qualified charities.