Thursday, July 18, 2024

Articles

Non-profit organizations often receive donations of inventories that they cannot use and even real estate that can become a burden just maintaining the property. One particular donation to a non-profit was a class A office building in upstate NY that due to an economic area downturn remained empty for several years.

The property owner, an organization had no use for the building, they were unable to rent it, and they were able to receive a greater tax benefit from donating the building than selling it at fire sale pricing. The non-profit that the building was donated to attempted to sell the building for cash, but soon found that they would have had to sell it for 40% less than the donated value, which would have caused an issue for the donor, as the property either had to be held by the non-profit for two years before they were able to sell it for less than the donated value or the donated value had to be reduced.

The solution was to trade the building for the full donated value in barter dollars. The non-profit received $1.4 million in barter dollars as well as a significant cash payment that covered the maintenance costs, taxes, transfer and other carrying costs.

The non-profit organization used their barter dollars to build a school for underprivileged children, nationwide newspaper advertising to bring in more donations and for auto repair to repair donated vehicles to get them in tip top shape for a cash sale.