Since the collapse of the real estate market, charities and nonprofits say there has been a trend toward property owners wanting to donate houses.
They say people 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 house, the charity benefits from proceeds from its eventual sale and the donor gets a tax deduction.
But there’s been a downside in metro 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.
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 car washes do you have to have to make 60 to $70,000?” he said.
Housing gifts increase as market dips
Charities and nonprofits have long been the recipients of donated cash, cars, food and clothing, but now there is a trend toward houses.
“We’ve seen a great increase in the houses offered,” said William Brazier, executive director of the Society of St. Vincent de Paul Detroit. “It was rare that we would get inquiries about donating houses.”
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 property donors as well.
Charles Konkus, president of Real Estate Donations, a division of the West Dundee, Ill.-based nonprofit Restoration America, said property donations are trending upward.
The group accepts donations for its own housing charity and manages the sale of donated houses for other charities.
Last month, the group closed on its 101st donated home this year, which was “way ahead” of the 73 last year, Konkus said.
In Michigan, he’s recently received house donations in Atlanta, St. Charles, Owosso, Frankenmuth and Marcellus. He also has accepted donated homes by Chase Bank in Grosse Pointe Woods and Eastpointe.
The Grosse Pointe Woods home on Roslyn has been remodeled; a family rents it and will eventually buy it. When they do, the money will go to Restoration America. The Eastpointe home on Rosalind is still vacant.
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. Of that number, 61 have been donated in Michigan, including 29 in Detroit.
Through October, 31 properties in Michigan were donated including 12 in Detroit, and others in Fenton, Harper Woods and Saginaw.
“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 located in desirable areas, but many houses offered are rundown and in deteriorating neighborhoods.
Most charities are not set up to rehab houses and therefore turn them down.
“We had to kind of look at our policy on accepting house donations,” Brazier said.
The Society of St. Vincent de Paul gets three or four calls a month regarding house donations, he said. The first question the agency asks the would-be donor 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.
“If it’s in nearly move-in condition,” he said, “we would have no problem renting it out to a family in need or selling it.”
John George, founder of Motor City Blight Busters, a nonprofit group that remodels homes and tears down others, said, “We have really curtailed the acceptance of property. It’s not like it used to be.”
Before the market downturn, Blight Busters would take derelict houses to rehab or to tear down but fewer donations are coming in, and they can’t afford either, George said.
“A lot of these properties people want to donate have two or three years of back taxes,” he said. “It’s a losing proposition from Day 1.”
But for some nonprofits, property donation is shaping up to be a major fund-raiser.
Chase Magnuson, director of Planned Giving, Real Estate for George Washington University in Washington, D.C., said he was hired two years ago to handle real estate donations to the university from its alumni.
The university solicits property donations but only accepts donations where the property will net the university at least $100,000 at the closing, he said. In the past two years, he has closed on 13 properties and there are six more in the pipeline, he said.
“Prior to the downturn people could sell their homes for cash unless they were philanthropically inclined,” Magnuson said. “Things have changed. This is just a great opportunity for charities.”