How Real Estate Investors Can Donate Property Tax Efficiently and Avoid Capital Gains

Rick Peck (00:00)
A lot of people in the world of real estate don’t know that they can donate real estate and they don’t know how to donate real estate. So I often will plug the idea of non-cash asset donations like real estate, stocks and bonds, mutual funds, closely held stock, life insurance cash value.

Michelle Kesil (01:57)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Richard Peck, who is an independent philanthropy advisor working with nonprofits, donors, and professional advisors. So excited to have you here today, Rick.

Rick Peck (02:19)
Thank you for having me, Michelle, it’s a pleasure.

Michelle Kesil (02:20)
Course, let’s dive in. So first off, for those new to your world, can you share what your main focus is?

Rick Peck (02:27)
Yeah. I am an independent philanthropy advisor, as you say, and I mostly work with nonprofits who are trying to raise money, either just cover the basic fundamentals of fundraising or go into a capital campaign, which is usually five million, ten million or something that is trying to help them achieve their strategic objectives. I also work with individuals and families, in family offices often, in helping those individuals give away money—so on sort of the other side of the equation. And then the third group I work with are CPAs, wealth advisors, trust and estates attorneys, and try to help them have a better handle on the philanthropic conversation. So the majority of my work, no question, is working with nonprofits who are trying to raise money. And a lot of what I try to do is not only help them with a case for support to help them go raise that money, I also talk to them about things like non-cash asset donations, including real estate, to help them get over the finish line a lot faster.

Michelle Kesil (03:27)
Awesome. And are there any particular markets that you operate in?

Rick Peck (03:30)
I would say that I—I’m from the New England area, so I have been fortunate to have a lot of business that happens in New Hampshire, but also Vermont and Maine, in Massachusetts. And then I’ve started to broaden to other parts of the country, including two new clients in Hawaii, and then I’ve done also international work in Canada and Africa. So I would say that a lot of what I do is somewhat borderless in the sense of all the individuals and institutions I talk to need best practices. They just don’t know what to do. And so I walk them through it no matter where their location is. There’s probably a lot of the things in the fundamentals that they need to get better at.

Michelle Kesil (04:17)
And what are some of the main keys that you feel have allowed your business to grow and run successfully?

Rick Peck (04:26)
I would say that it’s thinking about business that you’re working in, I think they say, and then you work on your business. So working in the business of saying, “Okay, well, I’m a consultant, so how am I going to bring the best value to my clients? How am I going to give them the materials they need, be a good teacher, and then walk them through strategy and tactics?” But then I also say stepping back and looking at the business itself. How do I manage multiple clients? How am I managing my calendar? How am I managing my marketing? How am I managing my—my materials, my organization of my emails and folders and all that kind of stuff. So I’d say it’s those things are important and I would also say I’ve always been conscientious of a network of people. Staying very close to those who are in my industry, getting to know them better and continuing to build that network out has been very helpful. So I’d say it’s all those things that help create success as well as, you know, other things that just continue to evolve around how are you handling your bookkeeping, how are you handling logos, how are you handling collaborations with other consultants and agreements and things like that. So I’d say it’s—it’s first and foremost, it’s concentrating on bringing the greatest value to the clients, but it’s also how do I continue to sustain and grow if that’s what I want to do as a business person.

Michelle Kesil (06:42)
Sure. And who are the main type of clients that you are working with?

Rick Peck (06:47)
I would say the nonprofits vary widely. From—I told you they’re geographically diverse, but I would say a lot of the nonprofits are—they can be fairly small, but they’re not so small that they can’t pay for fundraising practices. So if, in other words, if—if I’m offering my fee and I’m saying there’s another consultant that you need to consult with, you also need to be paying for that. And that usually, I would say, is at the revenue level of a million dollars. So a million dollars in revenue from that nonprofit. And it can go as high as the largest nonprofits. The largest one I ever worked with was the Silicon Valley Community Foundation, and they’re more like a twelve billion dollar organization. So they’re in a completely different—different class from the one million dollar group. But I would say that they all come to the table. The ones I like the best are the ones that can pivot quickly and move toward the advice that I’m giving them, rather than feel like I’m giving them a lot of advice and they’re not able to take it. So I would say I enjoy working with like the three million to ten million dollar in annual revenue, that category, and I’m talking more specifically around contributed revenue related to fundraising. That is—is has been a—a sweet spot for me because I feel like we’re able to move more quickly through a lot of the different pieces of advice that I’m giving them and we’re able to make some real progress and get things done. In a matter of weeks and months we’re able to move things along a lot faster than some of the larger organizations which can sometimes take years.

Michelle Kesil (08:29)
And a lot of the audience here is real estate investors. Does this correspond with their work?

Rick Peck (08:36)
Yeah, I’d say real estate investors, lot of people in the world of real estate don’t know that they can donate real estate and they don’t know how to donate real estate. So I often will plug the idea of non-cash asset donations like real estate, stocks and bonds, mutual funds, closely held stock, life insurance cash value, tangible personal property, retirement plans, donor-advised funds. So real estate fits right in the mix there. And real estate is, as I’m sure your listeners know, a big chunk of people’s core assets as far as their portfolios go. So there’s six different ways to donate real estate. And what I try to do is get out there and educate about those different ways to donate and how if there’s great capital gains associated with a property, it can be donated what—what’s called in-kind, it can be donated in-kind and directly to a nonprofit or another entity. Entity that’s a 501(c)(3) and all capital gains taxes are waived. So that is very attractive versus say selling the real estate and then taking the net proceeds and donating those, why not donate the whole thing in-kind?

And there are two groups that I would like to mention—and we do not have any revenue-sharing arrangements, so I just want to say for the record, I’m mentioning them based on the clear merits of their work—which is the group, a group called Realty Gift Fund out of Santa Fe, New Mexico, which is solely set up to help facilitate gifts of real estate to nonprofits, and there’s another group called Charitable Solutions, which is also a fantastic organization, and they do a lot of work with all kinds of different assets, including real estate. So there are at least two groups out there that are trying to help facilitate gifts of real estate. And so your listeners who are in the world may say, “I do have some real estate. I have a few pieces of real estate, I don’t know what to do with them, I don’t want to sell them. I would be perfectly okay with donating them, but I don’t know how to do it.” And so that’s where I step in and some of these others step in and help make it happen. What happens with these other entities is they will—they will market and sell the properties and then take the net proceeds and donate the net proceeds or, I should say, transfer the net proceeds over to the nonprofit for—for its use. So that’s what I try to do is get out and promote that as much as possible because I think both the donors and the nonprofits don’t really understand that world very much and if they did, I think there would be a lot more real estate. Yeah.

Michelle Kesil (11:54)
Yeah, absolutely. And where do these donations—like, you mentioned the organizations, but then from there, where do they go?

Rick Peck (12:01)
Well, if—sometimes the organization takes and pays for unrestricted—I shouldn’t say unrestricted, but like operating expenses. And sometimes they put the money toward endowments to build their endowment up so they can spend a certain percentage of that endowment out each year for their budget. And then many times they’re putting it toward a capital campaign. So it could be programs, it could be capital expenditures related to bricks and mortar or what have you. There’s—it could be in some situations, if it’s a—if it’s a school, they’re trying to build up their scholarship program. So it could be to a variety of different things that these dollars are allocated toward. One of the things I help nonprofits do a lot is develop cases for support. And in the case for support, often a real estate donor can donate the real estate and say, “I would like the dollars, once they’re liquidated, I would like the dollars to go to this particular part of the case for support. I would like it to go to solution or objective number three.” And with these dollar levels associated with that, “I would like my net real estate proceeds to go toward that.” That tends to be a way to go about doing that, especially with higher dollar levels when we’re talking about six and seven and sometimes eight figures, there is definitely gonna be a desire for the donor to want to know exactly where those dollars are going. And so that obviously can be a conversation prior to the gift, and then when the gift is made it can be allocated toward one of those priorities.

Michelle Kesil (13:29)
And what would you say you’re most focused on solving or scaling to next?

Rick Peck (13:35)
Trying to help as many nonprofits as possible solve these fundamental fundraising problems for themselves and create the type of impact they’re looking to make. And if I can help make it easier for them to raise the kind of money they need to raise in the shortest amount of time, in the most effective and diverse way, then that’s the type of effect that I’m hoping to produce. And if I can bring donors along with me, that would be fantastic. And so that’s what I’m looking to do is really just get out there and—and either myself or with others show what best practices look like in fundraising and help make things happen. And together, I think we could really make a major difference in what nonprofits are trying to do worldwide as long as we follow a lot of these best practices.

Michelle Kesil (14:24)
Is there an opportunity or a goal that you have that you’re looking forward to completing?

Rick Peck (14:30)
Completing a book. I’m trying to finish a book right now. I try to finish that by the end of this year if I can. So it’s a book on the fundamentals of fundraising, and I wrote it maybe four years ago, but I still haven’t completed it because the editor who read it said—that he said, “Well, it’s a good book, it’s good for a niche audience, but you need some more examples of actual real-life stories.” So that’s my job is to populate this with actual real-life stories. And so that’s what I’m setting out to do in August is sit down for a week and sit—sit down and just really buckle down and get—I’m sure they’ll just flow out of me once I sit down, but it’s just a matter of spending the time to do it. So—so that’s what I hope to do soon is get that book out on the fundamentals of fundraising with lots of good stories, and hopefully that’ll be both entertaining and informative for readers, especially executive directors of nonprofits and directors of development, as well as board members at nonprofits to make sure that they also feel like they’re getting good—a good primer on—on how all this stuff works.

Michelle Kesil (16:17)
Are there specific nonprofits that you work with, or it’s all of them?

Rick Peck (16:22)
Any sort of topic area you can imagine—charter schools, clinics, small clinics for example, like medical and dental clinics. I work with social services organizations, a lot of those come up as opportunities, and yeah, I worked with a—a school, two different schools. One was helping with help—helping people become performers on stage, and another one is a pro—a private school that’s helping people just get through high school and become prepared for college. So—and—and everything in between. I’m working with a museum right now; they’re trying to launch a museum. Yeah, there’s all kinds of different different categories, which makes my job kind of fun because I get to learn about all these different categories in great detail and then help them market it out and try to help them raise money for it. So—so that’s what I like about it.

My—my experience has mostly been in academia and healthcare as well as community foundations. But as I said before, I think the fundamentals of all this work apply to whatever genre or whatever topic area, and so I get to kinda open that up and say I could focus on these things. I really know these niches very well, but at the same time I can help you when you—whatever your topic area is, I’m sure that we can lay a good strong foundation together.

Michelle Kesil (17:48)
Yeah, and what have been the biggest obstacles or challenges that you’ve had to overcome and learn from in this role?

Rick Peck (17:56)
As a—as a consultant, you know, at my stage, I’ve been—when I started, I’d been doing the work in—in development for probably about seventeen years, and so I thought, “Well, this—I’m really gonna hit the ground running hard and it’s gonna be great,” and in some ways I did. But I think the challenges are always finding nonprofits to work with—not so much that—I mean, I know I can help a lot of them. The question is, do they want help? And so you’re moving through a lot of organizations that aren’t ready for the help. They either don’t have the budget or they don’t have the focus. They don’t have the—the people power to make it happen. But—so you kind of have to keep moving through as a consultant and saying, “Okay, well, they’re not ready yet. How do I keep going and finding the people that are ready?”

So in some ways, the challenge is of—of sort of perfecting your sales piece, so to speak, or your—your value proposition, including your actual dollar impact. So in other words, if you spend money on me, how much money would you might—might you expect on the other side when you go to complete your capital campaign? So I’ve been more—instead of what I used to say is, “Hey, if you eat your fruits and vegetables and you sleep well at night and you—you exercise, you will be healthy.” But I realize a lot of people are coming to me and saying, “Okay, well, what’s my blood pressure gonna be? Or what—am I gonna lower my cholesterol or am I gonna lose weight?” So I realized results are important. People are making a big financial decision, so therefore I will come to them and say, “Okay, this client spent this amount of money and reaped five times that, or they spent this and spent—and got twenty times that, or they spent this amount of money and they got forty times that in revenue.” So kind of boiling it down to, if that’s what you’re most concerned about, this is how much money this nonprofit was able to yield and in this amount of time, which could be five months, nine months, a year. So—so the challenges of sort of selling one’s services to those who are unaware of how it all works or not acclimated to me or what I do, continuing to kind of perfect that language and make it easy to buy from me, so to speak, and buy from others is a constant challenge, and I’d say, you know, rewarding in its own right, because when you do it well, you start to see that people take action faster ’cause they understand the value proposition better.

Michelle Kesil (20:25)
Thank you for sharing all of that.

Rick Peck (20:26)
Yeah, you’re welcome.

Michelle Kesil (20:28)
So before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

Rick Peck (20:33)
They can find me at my website, thephilanthropyguy.com. And also they could reach out to me at [email protected]. And you can also find me on LinkedIn, and just look up Richard Peck. And if you type in the Philanthropy Guy, it’ll probably come up. And then I’m also working on another project that people might want to check out—it’s called The Generosity Collective, and you can look that up as well. Just type in Generosity Collective and fundraising and you might see something in there about that. But that’s more of that—I would say that’s more of a scaling—a scaled version of what I do as a consultant. We’re trying to bring a lot of other practitioners together to help as many nonprofits as possible through the Generosity Collective. So those are all the different ways you can find me.

Michelle Kesil (21:20)
Perfect. Well, appreciate your time and your story. Thank you so much for being here.

Rick Peck (21:23)
Thank you for having me, Michelle. It’s a pleasure.

Michelle Kesil (21:26)
Course, and for those tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Rick who are building real businesses. And we’ll see you on the next episode.