Education Roundtable: Charitable Gifts of Real Estate
2019 Education Roundtable Series, which will focus on current legal developments and updates facing higher education institutions and nonprofit organizations.
DUE DILIGENCE CHALLENGES
Mimi M. Lines
Gifts of real estate present special due diligence challenges for nonprofit organizations. How do you determine the value of the property? What is its condition? Are there any environmental or title risks associated with the property? What are the costs of ownership and what is the strategy for owning and disposing of the property? Does your organization’s gift policy adequately address these issues? Mimi will lead a discussion of issues that your organization must consider in accepting a gift of real estate.
ASSOCIATED FINANCIAL AND TAX ISSUES
Ryan V. Leichsenring
Gifts of real estate also present a number of interesting financial and other tax issues. Does the nonprofit accept the gift directly or does it create a new entity to accept and hold title to the property? What are the implications of holding the property in a nonstock corporation or a limited liability company? What sort of agreement should the organization’s development officers consider executing with a donor? What are the organization’s obligations to that prospective donor? Must the organization keep the property, or may it sell it to invest the proceeds in the organization’s charitable activities? What sorts of reporting obligations are triggered by the gift? A gift always sounds like a good thing to accept, but it is critical for nonprofit organizations to consider the true economic costs attached at the time of receipt and going forward as the new owner. Ryan will provide insights into these questions and more as we discuss gifts of real estate to nonprofit organizations.