An anonymous donor found a way to sell a piece of real estate, avoid taxes and donate $690,000 to Breakthrough Central Texas using a little known tool through the Austin Community Foundation. He also received a tax deduction for his gift.
“For Breakthrough, this was a first,” said Grace Holland, a chief development officer for the nonprofit that helps first-generation college students complete a degree. “It’s the largest single check that Breakthrough has ever received.”
Holland explained that had the donor sold the home and then donated the proceeds, because the home had increased in value he would have had to pay capital gains taxes, which also would have resulted in a smaller donation. By donating it directly to charity, the donor did not have to pay those taxes and he received the benefit of a charitable tax deduction.
The donor, who made the gift on the condition that his name not be revealed, had the idea for donating the house because he knew nonprofits accepted cars as donations. “So I just thought there must be an avenue like this for real estate,” he said.
As a long-time supporter of Breakthrough, he said he also knew that — like most Austin-area nonprofit groups — Breakthrough did not have the staff or time to handle the acceptance and sale of a home. That’s when he contacted the Austin Community Foundation.
“That’s one of the roles we can play for donors,” said Coralie Pledger, chief financial officer for the foundation. “We’re just more efficient. We have counsel with that experience and we have a process.”
The foundation charges a fee for processing the sale and donation, but Pledger says the fee is based on the level of complication of the transaction. It handles 12 to 20 donations of real estate assets a year.
The entire transaction took less than three months, said Pledger, though she advises that not every donation of assets is as simple. The donor did not owe money on the property and did not use it to generate income, plus the current Austin housing market made for a quick sale.
It can get complicated, said Pledger, but she added, “I sense a great deal of satisfaction for donors. A lot of times we are taking something that’s become a hassle and turn it into something good.”
“It was the most exciting thing I’ve ever done,” said the donor. He said he hopes others will be inspired to take their unwanted real estate property and donate it to a cause they care about rather than sell it.
“Austin is one of the most economically segregated cities in the country. It doesn’t have to be that way. This is my city,” said the donor, an Austin native. “I’ve got about 20 years left on this planet, so if I’m going to make this a better city, then it’s got to start with the kids.”
Giving City Austin
This article is published through a partnership with Giving City Austin, which reports on the area’s nonprofit community. Read more Giving City stories at GivingCityAustin.com.