Field of (Charitable) Dreams: A Grand Slam for Nonprofits

A Minnesota family owned a 300-acre agricultural property in rural Clark County, South Dakota for over a decade, which in 2022 was being used for crops and cattle under a lease that expired at conclusion of the 2022 harvest.  In consultation with a trusted financial advisor, the family decided to use this asset to fund their charitable interests, hoping to apply the tax benefits of a real estate gift against 2022 income.  

The owner and RGF connected in early September and RGF immediately began its evaluation and acceptance process while its new Donor sought a current appraisal to establish the gift value.  From the start it was clear this gift might yield $1,000,000 for the nonprofit world by allowing the donor to avoid capital gain and depreciation recapture taxes on a gift of highly appreciated real estate.

The Realty Gift Fund network of regional experts was engaged for detailed information on the donor’s property and its comparison to other recent transactions.  While preparing for a typical agricultural marketing and sale process, possibly under an auction format, RGF simultaneously pursued neighboring operators who might be seeking to expand their local footprint.  

In fact, two such neighbors generated offers that rose to the target value, one superior to the other and whose family had owned the subject property generations earlier.  Being able to sell the property without the cost of the broker obviously improved the outcome.  The dates to close the donation and sale were set sequentially for mid-December, which allowed the tenant to clear equipment and cattle from the land, for the buyer to secure needed financing, and for the title companies to coordinate the exchange of closing documents since all parties were closing “by mail”.

As an unexpected challenge, a record-setting December blizzard closed highways and the county recording office for more than a week, delaying the physical delivery of closing documents in a county not set up for electronic filings.  It was RGF’s ultimate responsibility that the two deed transfers, first for the gift then for the sale, occurred timely and in the proper order.  By the end, after closing costs, RGF and its donors were able to celebrate a grant of nearly $1,000,000 to a new donor advised fund at Fidelity Charitable.

 

At RGF, we accept complex gifts of real estate across the country by tapping into a national network of professionals who are grateful to help us serve their communities. Please call Bruce Geiss at (505) 660-8470 or Jay Grab at (505) 690-7174 to learn how Realty Gift Fund can benefit your nonprofit.