ABOUT REALTY GIFT FUND
The mission of Realty Gift Fund is to promote the charitable giving of real estate by seeking and accepting gifts of real estate of all kinds, fixing underperforming or environmentally impaired properties before converting them to cash, and using the excess cash from our transactions to make gifts and educational grants to other non-profit organizations. By educating owners, non-profit leaders and other professionals in the field, RGF 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 2015, $373 billion was given to charities who relieve government from a wide array of programs that serve our communities. However, less than 3.0% of total giving came from gifts of real estate, despite the fact that almost 45.0% 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 further philanthropy and improve the environment through charitable donations of all real estate has a special appeal to our problem-solving nature.
We accept gifts of all types of real estate, including outright donations and bargain sales. Accepted properties shall be improved or remediated, if required, then re-sold for cash. Excess proceeds from transactions will be gifted to charities our donors have recommended, to charities who referred the donor, or to charities RGF supports.
- an outright gift,
- a bargain sale,
- a contaminated property that requires mitigation,
- an underperforming property that requires additional investment to improve its marketability, or
- a property encumbered with debt and requires a partial cash payment from RGF in order to clear the debt.
Yes, Realty Gift Fund is a Private Operating Foundation, a qualified 501(c)3 that provides the same tax benefits to a donor as a public charity.
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 understand the potential in untapped real estate giving and 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.
This amount will vary from year to year and from deal to deal. However, RGF has designed an efficient model in order to redirect substantial funds as gifts and grants to local charities.
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 creation of a process that releases this untapped resource 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, charities may have donors who own real estate and wish to make a gift using this appreciated asset but, until now, have struggled to do so. Our process allows charities to tap their loyal donor base, benefit from real estate gifts, but avoid the risk of owning, fixing, managing or investing in real estate directly.
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 1.5 million 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:
- Donor proposes property donation to RGF. Please call or write to us to get started.
- RGF conducts an initial evaluation testing the suitability the property for the RGF program.
- If the property passes the suitability test, RGF shall issue a Letter of Intent to the donor, proposing terms of an agreement, a potential donation value, an allocation of transaction costs or credits, and the basic provisions of the property transfer. If the property is contaminated, RGF and a qualified environmental company will also produce a risk management plan for the property.
- A signed LOI is converted to an Agreement and the transfer process begins.
- The transfer process concludes with a typical real estate closing that results in the donation. Under an outright gift of real estate, the donor transfers title and receives a charitable deduction. If the property requires environmental remediation, the donor also contributes remediation funds to RGF, receives a charitable deduction for the total value of real estate and cash contributed, and is named on an insurance policy protecting the donor from future liability and risk of the environmental issues. Under a Bargain Sale Agreement, the donor receives a partial cash payment and the charitable deduction will be equal to the difference between the cash payment and the property’s fair market value. In most cases, the donor will obtain a “qualified appraisal” to support the net value of the real estate being donated.
- After the donation is made, RGF proceeds to improve the value of an underperforming property, if required, through leasing, repairs, maintenance, capital investments or, if contaminated, the agreed remediation program. RGF then sells the property and distributes excess proceeds from the transaction as charitable gifts or grants.
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 philanthropic goals are unique and the RGF team is available to discuss your goals and 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. However, it is assumed that the donor has clear title to the property and that basic title, tax and property information is on hand. RGF cannot accept minority or partnership interests.
The transfer process will vary, but a typical time frame is 45 to 60 days from the date of the agreement. The time to produce a risk management plan depends on the complexity of the environmental issue and state and federal requirements, which vary state by state, and can extend the typical time frame to complete the donation.
An outright gift of “clean” real estate will be resold for cash. Underperforming real estate will be improved to add value, and environmentally impaired property will be remediated before these properties are resold. Excess proceeds from all resales will be allocated among RGF’s program activities and gifts or grants 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 take a gift, and statistics show that gifts of real estate are too complex or risky for most non-profits to accept. Further, the enforcement efforts waged by environmental agencies have produced an atmosphere where few, if any, charities will accept environmentally impaired properties. We are familiar with the remediation process and manage the process.
RGF seeks properties that will contribute to the fulfillment of our mission and produce significant community benefits.
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. We prefer properties with a minimum value of $500,000, have no maximum limit, and every property must be marketable once improved or repaired. No minority interests or partnerships will be considered.
RGF will value all properties during its initial evaluation. Most donations will also require an independent valuation (a “qualified appraisal”) in accordance with IRS Regulations and the donor will be responsibility to obtain this independent valuation. Different rules apply for individuals, small business entities, and publicly traded corporations. Every donor is urged to seek qualified legal and tax advice from qualified independent professionals.
Standard real estate closing costs will be paid by the donor which typically range between 1.00% and 2.0% of the property's fair market value and the donor will pay for the qualified appraisal. On a comparative basis, a standard real estate transaction, including closing costs, a broker fee and an appraisal, costs between 7% to 9% of a property's fair market value.
The economics of the potential gift will govern the acceptance in all cases, particularly when debt is involved. RGF’s ability to make a partial cash payment under a Bargain Sale agreement can provide the donor the funds needed to extinguish the debt before the donation.
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, adjusted for closing costs, less any cash payments made to the Donor, represents the charitable gift. A “qualified appraisal” determines the fair market value. For a gift of real estate, the charitable gift is deducted from the donor’s Adjusted Gross Income up to 30% of the donor’s AGI. 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 apply against 50% 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 percentage limitation for all gifts is 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 gives the tax payer a way to compare 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 20% of the taxes owed under a full outright 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 or corporation. These may include referrals, gifts, grants, education, site evaluations, conference speakers, financial analysis, consultation, volunteers, resourcing, etc. Collaboration and cooperation is 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.