Acquisition of a Property Through Donation

Strategy #2 from Historic Salisbury Foundation
Remember this strategy is for a 501c3 nonprofit organization.
Accusation of a Property Through Donation
o An individual, trust, government entity, organization, etc makes an outright donation of a property
Option to Purchase
o Negotiate an option to purchase a property
o Negotiate a fixed price and a fixed time for the option to buy (as long as possible)
o Pay $1 for the option to purchase to make it official
o Once signed, market the property
o Market the property for more than the option to purchase price in order to cover marketing expenses (don’t over price the building) Use the federal and state tax credits as incentives.
o When a new owner is found, the organization only owns the property for about an hour and the organization places an historic easement on the property with a preservation plan in place before it goes to the new owners
o Create first right of refusal to purchase the property it would go back on the market. This should be part of the preservation plan. Follow up with the property owner to make sure that they are following the preservation plan. If the organization would purchase the property they would have to pay “bona fide” offer at market value. This is rarely used.
Donation Sale
o Go directly to a property owner. Explain the purpose of the non profit organization and tax deductible donations.
o Ask to purchase a home for part of the value of the home and in return the organization can give a receipt of a tax deductible donation for the remaining amount. (Important with capital gains…donation can help offset the capital gains)