New Innovations In New Innovations In Fund Fund Development Development and Fundraising and Fundraising

Presented by Gail M. Sudore, C.F.R.E.Presented by Gail M. Sudore, C.F.R.E.

Association of Fundraising ProfessionalsAssociation of Fundraising ProfessionalsInternational ConferenceInternational Conference

San Diego, CaliforniaSan Diego, CaliforniaMarch 30-April 2, 2008March 30-April 2, 2008

Court Judgement Court Judgement Awards ProgramAwards Program

An Innovative Resource/Fund An Innovative Resource/Fund Development MethodologyDevelopment Methodology

WHEN A FINE OR ASSESSMENT IS MADE IN THE WHEN A FINE OR ASSESSMENT IS MADE IN THE DISPOSITION OF DISPOSITION OF A COURT CASEA COURT CASE

A JUDGE MAKES AN INDIVIDUAL A JUDGE MAKES AN INDIVIDUAL DETERMINATION AS TO WHERE THEDETERMINATION AS TO WHERE THE

FINE/ASSESSMENT IS ALLOCATED; OFTEN FINE/ASSESSMENT IS ALLOCATED; OFTEN JUDGEMENT AWARDS ARE ALLOCATED TO A JUDGEMENT AWARDS ARE ALLOCATED TO A

NONPROFIT ORGANIZATION(S)NONPROFIT ORGANIZATION(S)(USUALLY THE MOST VISABLE AND WELL (USUALLY THE MOST VISABLE AND WELL

KNOWN)KNOWN)

THE “GARBAGE BARGE” & THE AMERICAN RED THE “GARBAGE BARGE” & THE AMERICAN RED CROSSCROSS

THE COURT JUDGEMENT AWARDS THE COURT JUDGEMENT AWARDS PROGRAM IS A PRE-DETERMINEDPROGRAM IS A PRE-DETERMINEDALLOCATION ARRANGEMENT, ALLOCATION ARRANGEMENT,

WHEREBY WHEREBY • A JUDGE ON AN INDIVIDUAL BASISA JUDGE ON AN INDIVIDUAL BASIS

OROR• ALL JUDGES ON A CIRCUIT COURT ALL JUDGES ON A CIRCUIT COURT

WIDE BASISWIDE BASISALLOCATE THE FINE/ASSESSMENT(S) TO ALLOCATE THE FINE/ASSESSMENT(S) TO

A NONPROFIT ORGANIZATION(S) A NONPROFIT ORGANIZATION(S) WHOSE MISSION IS RELEVANT TO WHOSE MISSION IS RELEVANT TO

THE THE TYPE OF CASE TYPE OF CASE

TRANSFER FEE TRANSFER FEE CHARITABLE GIFT CHARITABLE GIFT

PROGRAMPROGRAM ©®©®

An Extraordinarily Innovative An Extraordinarily Innovative Resource/Resource/

Fund Development Methodology that Fund Development Methodology that has the Potential to Revolutionize has the Potential to Revolutionize

Fundraising and Planned Giving Fundraising and Planned Giving

The Transfer Fee Charitable Giving The Transfer Fee Charitable Giving Program began as a way to raise Program began as a way to raise

large amounts of money in a large amounts of money in a relatively short period of time;relatively short period of time;

the program was first implemented in the program was first implemented in South Carolina to build an South Carolina to build an

environmental education center and environmental education center and then in Wyoming, Pennsylvania and then in Wyoming, Pennsylvania and Florida to fund land acquisitions for Florida to fund land acquisitions for

conservation purposes conservation purposes

$600.6 Billion in Charitable Contributions $600.6 Billion in Charitable Contributions were given in the USA in 2008 from were given in the USA in 2008 from foundations, corporations and individualsfoundations, corporations and individuals

The largest gifts made by individuals The largest gifts made by individuals came from individuals with annual came from individuals with annual incomes over $250,000; 776,250 incomes over $250,000; 776,250 households/1.7% of USA’s populationhouseholds/1.7% of USA’s population

$40,956 median household income in $40,956 median household income in USA;USA;

80.2% of households in USA have income 80.2% of households in USA have income of less than $50,000of less than $50,000

*Source: Grantmakers Forum ‘State of Philanthropy 2008” Report and 2000 U.S. Census*Source: Grantmakers Forum ‘State of Philanthropy 2008” Report and 2000 U.S. Census

Example:Example:

There are 26,411,239 acres of land in There are 26,411,239 acres of land in the State of Ohiothe State of Ohio

The taxable value of Ohio’s real property is The taxable value of Ohio’s real property is $173,718,291,865 billion$173,718,291,865 billion

Over the next two to twenty years millionsOver the next two to twenty years millions and millions of acres in Ohio and millions of acres in Ohio

are going to change handsare going to change hands

*Source U.S. Soil Conservation Service*Source U.S. Soil Conservation Service

The Transfer Fee Program is a process The Transfer Fee Program is a process of raising money based on the sale- or transfer- of raising money based on the sale- or transfer-

of a valuable asset of a valuable asset (such as a house/condo, lot/parcel of land, boat/yacht, (such as a house/condo, lot/parcel of land, boat/yacht, vehicle, securities, art, jewelry, antiques/collectables, vehicle, securities, art, jewelry, antiques/collectables,

etc.)etc.)

Unlike the traditional fundraising scenarios Unlike the traditional fundraising scenarios where the donor contributes the asset at its where the donor contributes the asset at its

fair market value to charity and simply gets a fair market value to charity and simply gets a tax benefit,tax benefit,

in a transfer fee arrangement in a transfer fee arrangement The donor reaps the benefit from the proceeds The donor reaps the benefit from the proceeds

of the sale of the asset of the sale of the asset AND AND the tax benefits the tax benefits fromfrom

a charitable contributiona charitable contribution

• Voluntary contractual agreement between the Voluntary contractual agreement between the donor and the charitable organization (no donor and the charitable organization (no statutory/regulatory approval is required)statutory/regulatory approval is required)

• Terms of the agreement are negotiated based Terms of the agreement are negotiated based on the interests, desired goals, value of asset, on the interests, desired goals, value of asset, and the tax considerations of the donorand the tax considerations of the donor

-Length of the agreement-Length of the agreement (one time or for a period of years) (one time or for a period of years) -Recorded Instrument (covenant on -Recorded Instrument (covenant on

deed/title) deed/title) -Charitable gift to come from seller’s -Charitable gift to come from seller’s proceeds or buyers price/cost (the donor proceeds or buyers price/cost (the donor decides) decides)

-Donor decides the percentage (transfer -Donor decides the percentage (transfer fee) fee)

contributed to the charitycontributed to the charity During calendar year 2009 1/7 of 1%During calendar year 2009 1/7 of 1% During calendar year 2010 2/7 of 1%During calendar year 2010 2/7 of 1% During calendar year 2011 3/7 of 1%During calendar year 2011 3/7 of 1% During Calendar year 2012 4/7 of 1%During Calendar year 2012 4/7 of 1% During Calendar year 2013 6/7 of 1%During Calendar year 2013 6/7 of 1% On or after January 1, 2014 1% On or after January 1, 2014 1%

Transfer Fee donations can be made by Transfer Fee donations can be made by individuals, home owners associations, individuals, home owners associations,

corporations/business owners, developers, corporations/business owners, developers, etc. etc.

• The terms of the agreement are incorporated The terms of the agreement are incorporated into the covenants, conditions and restrictions of into the covenants, conditions and restrictions of the deed and recorded in the County Clerk’s the deed and recorded in the County Clerk’s officeoffice

• The transfer fee is collected at the closing of the The transfer fee is collected at the closing of the sale by the title company (or other legally sale by the title company (or other legally recognized transaction agent) from the seller (or recognized transaction agent) from the seller (or the buyer) of the asset and paid to the the buyer) of the asset and paid to the charitable organizationcharitable organization

• The fee is based on a percentage of the sale The fee is based on a percentage of the sale price on a one-time basis or over a period of time price on a one-time basis or over a period of time specified; the fee can be at a fixed rate or an specified; the fee can be at a fixed rate or an incremental rate for the term of the agreement incremental rate for the term of the agreement

Tax Benefits/ConsiderationsTax Benefits/Considerations

Income Tax Deduction/CreditIncome Tax Deduction/Credit• Accelerated Income Tax benefits from Gifts Accelerated Income Tax benefits from Gifts

on Basis (I.R.S. 50% rule) on Basis (I.R.S. 50% rule) • Income Tax Deduction for Partial Gift (Bargain Income Tax Deduction for Partial Gift (Bargain

Sale)Sale)• Reduction of Tax Obligation or Deferred Tax Reduction of Tax Obligation or Deferred Tax

Treatment (Capital Gains or Ordinary Income)Treatment (Capital Gains or Ordinary Income)• Estate Tax BenefitsEstate Tax Benefits

• Phasing of Charitable GiftsPhasing of Charitable Gifts• Carry over tax benefit (similar to a gift of a Carry over tax benefit (similar to a gift of a

conservation easement) 5 years; I.R.S. 30% conservation easement) 5 years; I.R.S. 30% rule) rule)

A TRANSFER FEE A TRANSFER FEE PROGRAMPROGRAM

ENABLES THE DONOR TO ENABLES THE DONOR TO MAKE A MUCH LARGER MAKE A MUCH LARGER

GIFT OR GIVE MORE GIFT OR GIVE MORE OFTEN THAN THEY MAY OFTEN THAN THEY MAY

OTHERWISE BE ABLEOTHERWISE BE ABLE

To Implement the Program:To Implement the Program:

• Negotiation SkillsNegotiation Skills• Knowledge of the Federal Tax Code/IRS Knowledge of the Federal Tax Code/IRS

requirements, applicability and benefits requirements, applicability and benefits • An understanding of the donor’s An understanding of the donor’s interests and goals/desired outcomes interests and goals/desired outcomes for the proceeds from the sale of their for the proceeds from the sale of their

asset asset • Knowledge of cause-related marketing Knowledge of cause-related marketing

motivations and benefitsmotivations and benefits• Legal counselLegal counsel

As with any planned giving program,As with any planned giving program,

the donor should be encouraged to the donor should be encouraged to seek advice from their own legal and seek advice from their own legal and

financial advisorsfinancial advisors

and the transfer fee agreement should and the transfer fee agreement should be negotiated via and/or reviewed be negotiated via and/or reviewed

by both parties legal counsel, as it is by both parties legal counsel, as it is a legal contracta legal contract

Testimonials from Transfer Fee Program Testimonials from Transfer Fee Program ParticipantsParticipants

““I established a covenant on the single family lots I owned to I established a covenant on the single family lots I owned to permanently endow the Land Trust. This method (of charitable permanently endow the Land Trust. This method (of charitable giving) should be a model for other landowners.”giving) should be a model for other landowners.”

-Stanley Resor, Owner of Snake River Ranch -Stanley Resor, Owner of Snake River Ranch

““The private transfer fee which was implemented by the The private transfer fee which was implemented by the homeowners association has had no impact on the sale of these homeowners association has had no impact on the sale of these lots and homes. None of the buyers ‘batted an eye’ when the lots and homes. None of the buyers ‘batted an eye’ when the transfer fee was mentioned.”transfer fee was mentioned.”

-Mercedes Huff, Owner/Associate Broker-Mercedes Huff, Owner/Associate Broker Jackson Hole Realty Jackson Hole Realty

““Whenever my firm closes on the sale of a property, it is our Whenever my firm closes on the sale of a property, it is our responsibility to debit the seller at closing for the contribution responsibility to debit the seller at closing for the contribution to the Land Trust Network. This is practically effortless on our to the Land Trust Network. This is practically effortless on our part.”part.”

-Joaquin Hanson, President-Joaquin Hanson, President Jackson Hole Title and Escrow Jackson Hole Title and Escrow

The Transfer Fee Charitable Gift Program is The Transfer Fee Charitable Gift Program is a copyrighted and patented program a copyrighted and patented program

developed by Gail M. Sudore, C.F.R.E. developed by Gail M. Sudore, C.F.R.E. Copyrighted and patented 2001Copyrighted and patented 2001

All rights reservedAll rights reserved

For further information on the program For further information on the program and/or to obtain permission to use the and/or to obtain permission to use the

program and a licensing fee program and a licensing fee schedule/agreement,schedule/agreement,

Contact Ms. Sudore at c/o 61 Liberty Street, Contact Ms. Sudore at c/o 61 Liberty Street, Dansville NY 14437; Tel: 607-483-5383; Dansville NY 14437; Tel: 607-483-5383;

E-Mail: E-Mail: SudoreG@gmail.com SudoreG@gmail.com