Real estate is one of the nation’s most underused charitable giving assets. Although property accounts for roughly 43 percent of U.S. household wealth, gifts of real estate represent only about 3 percent of all philanthropic contributions. Two main factors explain why real estate often flies under the radar:
• Many donors don’t realize they can transfer land or buildings directly to a charity. • Complex legal, tax and valuation issues usually call for input from appraisers, attorneys and other specialists.
At first glance, selling appreciated property and donating the net proceeds may seem simpler. In reality, however, converting real estate to cash and then giving reduces the overall impact of your gift because you pay capital gains tax on the sale. Consider this illustration:
• Option 1: Sell a $1 million property, pay long-term capital gains tax, then donate what remains. • Option 2: Donate the $1 million property outright, avoid capital gains tax, and claim a deduction equal to fair market value.
Even after stepping aside state or local taxes and the Medicare surtax, Option 2 typically delivers much greater benefits. In our example, the donor’s federal tax savings equal the deduction multiplied by a 24 percent rate, minus any capital gains tax owed in Option 1.
Benefits for Donors Donating real estate directly to a 501(c)(3) public charity can: • Eliminate capital gains tax on the appreciation • Generate an income tax deduction based on fair market value • Provide retirement income via a charitable gift annuity or remainder trust • Enhance the advantages of a private foundation • Magnify philanthropic impact • Create a lasting legacy for you and your family
Not every charity has the capacity or know-how to process complex gifts like land and buildings, which is where specialized support becomes invaluable.
Benefits for Nonprofits Accepting real estate gifts can transform a nonprofit’s financial picture by: • Diversifying revenue streams and reducing dependence on traditional fundraising • Offering donors tax-efficient giving options that attract larger, longer-term commitments • Facilitating strategic growth—such as program expansion, facility acquisition or endowment building
Partnering with 501 DONATE’s Charitable Real Estate Foundation (CREF) At 501 DONATE, we recognize the power of real estate gifts to unlock new resources for both donors and nonprofits. Through our Charitable Real Estate Foundation—an affiliated support organization—we guide every step of the process:
• For Donors: The CREF board oversees our Giving Team’s work with you and your advisors. We provide prompt, accurate valuations, clarify tax benefits, and tailor giving solutions whether you’re making a direct gift of property or contributing through a donor-advised fund. • For Nonprofits: We collaborate to design and implement a custom gift-acceptance strategy. From due diligence, title review and environmental studies to legal compliance, asset management and liability mitigation, our expert board ensures you capture the full value of each property gift.
“We partnered with San Diego Foundation to donate our family condo in Oregon to our donor-advised fund,” says Jim Ward, a 501 DONATE donor. “Their expert staff guided us through every step, helping us maximize our donation and avoid unnecessary capital gains tax.” “I felt secure donating my real estate,” adds Mike House. “I knew I was getting the best advice and support to make my gift count.”
We also work closely with your team of accountants, tax attorneys and estate-planning advisors to ensure a smooth, coordinated experience.
Whether you’re a philanthropist seeking to amplify your impact or a nonprofit aiming to diversify your funding base, 501 DONATE and the Charitable Real Estate Foundation stand ready to help you harness the full potential of real estate giving. Contact us today to explore how we can advance your charitable goals and drive lasting change.
About 501 Donate 501 Donate is a for-profit marketing company that connects donors with thoroughly vetted charities and causes. We do not accept donations or hold 501(c)(3) status ourselves. Instead, we bridge the gap between generous individuals and the nonprofits they wish to support, offering guidance via our website, email or YouTube channel. For direct contributions, please reach out to the relevant charitable organization.
