I am trying to determine a way to fund a charitable cause through real estate holdings. At this point, I’m not sure I’m even using the correct terminology and as such I’m having difficulty finding resources and information. Any assistance, including “read this book” or “that can’t legally work because…” would be greatly appreciated.
In a nutshell, I want to purchase income-producing real estate and have that income be funneled to a non-profit. The properties would initially have debt service but would produce enough income to be self-supporting with a positive cash flow. And of course when the debts are satisfied more income will be available to support the non-profit.
So how to do this? Would properties be held in some sort of trust - a charitable trust? Can that be done if there is debt on the properties?
I know this will ultimately require expert legal guidance, I’m just trying to get some basic concepts in my mind at this point.
You can donate the residual income to the charity or you donate the entire property to the charity to do with as they wish (hold for income , sell, etc).
CAUTION: Trying to "make a donation"and “maintain control” at the same time only causes problems for both you and the organization (restricted contribution). Either make an unrestricted donation of cash or property, or do not.
If your desire is to fund various organizations, then contributing the property to a trust may make sense. Understand, though, that this is a one way street. You can’t take it back.
There are basically two types of charitable trusts: lead and remainder. A lead trust lets the organization benefit from the income and then when you die the property in the trust is disposed according to your will. A remainder trust is the opposite; you benefit from the income (that you can then donate as a charitable contribution) and at death the property transfers to the organization of your choice.
Either of these will require an atty who specializes in charitable trusts.
Or were you envisioning the creation of a 501c3 Non-Profit Foundation where you solicite businesses and wealthy investors for gifts of real estate for future funding of the foundations mandate?
GR
I had wondered about the foundation angle too. Again, just don’t know enough about either to ask questions but trying to get minimal understanding before searching for an attorney so I can be sure to get one that has experience in doing this kind of thing.
Here’s my goal. I want to provide funding for a no-kill animal shelter, and I want to get it set up so that the income stream will continue even after I die. It occurred to me that I could have income properties (commercial, not single family stuff) held in trust, or a NPO of some sort, set up to specifically fund a shelter as long as it meets certain criteria regarding kill rates. I had thought that it (trust, foundation, whatever) could perhaps serve to receive donations of property from others as well, though that would not be the initial focus.
I would like to maintain some control over it while I am alive and to get it established, just to be sure that everything gets on track and stays that way.
Don’t know if that additional info changes responses/recommendations. Thanks again for any/all help and opinions.
Hi Kim,
If you would like to explore all the possible avenues of doing what you propose, (NPOs, Trusts, Foundations, Endowments, Bequests, etc.) I suggest you get in contact with your local Community Foundation. You can start by looking at this link: http://www.cof.org/
I personally have met with Hugh Ralston (http://www.vccf.org/ceo.shtml) at vccf.org and have attended his talks on getting projects like this done.
Kim, you need to find the Hugh Ralston in your geographic location, as I am showing you this as an example. Also take a look at this link: http://vccfgift.org/?pageID=10