Homeowners offer houses to charities instead of cash
Charities are realizing they can make far more from the sale of a single house than from other types of fundraisers.
Detroit Free Press
DETROIT — Charities and nonprofits have long been the recipients of donated cash, cars, food and clothing, but now there is a trend toward houses.
More people say they are feeling the financial burden of paying taxes, insurance and maintenance on houses that won't sell and continue to drop in value. When they donate the house, the charity benefits from proceeds from its eventual sale and the donor gets a tax deduction.
Charles Konkus, president of Real Estate Donations in West Dundee, Ill., which handles property donations for nonprofits, said the trend is strong. That's because charities are realizing they can make far more from the sale of a single house than from other types of fundraisers, he said.
"How many carwashes do you have to have to make $60(000) to $70,000?" he said. But there's been a downside in Detroit. Charities say they've been so flooded with offers to donate houses that they've been forced to adopt strict guidelines for what they'll take.
Before the downturn in the housing market, Habitat for Humanity Detroit used to get two calls every other month from people wanting to donate houses, said Vincent Tilford, executive director of the agency. But since 2008, they've been getting several calls a week, he said. "Ninety-eight percent of them we turn down," he said.
The decline of the housing market has property owners looking for ways to escape the taxes, insurance and upkeep for second homes, inherited houses and other properties. Banks saddled with foreclosures have been major donors as well.
Konkus said property donations are trending upward.
Last month, the group closed on its 101st donated home this year, which was "way ahead" of the 73 last year, Konkus said.
Natalie Abatemarco, managing director of Citi Community Development in New York, said that since 2009, the financial giant has donated 297 properties in 33 states. "We've always had a donation program but it has increased because the number of homes that have gone into foreclosure have increased," Abatemarco said.
The bank's benefit is twofold: "It stabilizes the housing prices all around it" and "it reduces the portfolio we have for nonperforming assets," she said.
But it has been a mixed bag for nonprofits.
On one hand, some donated properties have been in good condition and in desirable areas, but many houses offered are rundown and in deteriorating neighborhoods.
Most charities are not able to rehab houses and therefore turn them down.
The Society of St. Vincent de Paul gets three or four calls a month regarding house donations, said executive director William Brazier. The first question the agency asks is "Do we need a key to get in?" Brazier said that gives them an idea about the condition. One out of 10 homes has been accepted, with the others rejected because of condition.