Where charity begins
More than a decade later, Sada Segal’s legacy continues.
When the 91-year-old died in 1992, her son, Robert, put into action a plan started years before: that his mother’s Santa Monica condominium be sold and the proceeds given to charity. The Segals are among a growing number of the philanthropically minded who, when the stock market tanked as property values continued to boom, began donating equity-rich real estate.
During her life, Sada Segal was passionate about supporting peace in the Middle East and equality for women in the workplace. When her $300,000 condo was sold, Robert Segal, now 70, worked through the California Community Foundation to make donations from the sale to the causes his mother loved, as well as to the Boys and Girls Clubs of Santa Monica, the Venice Family Clinic, the Santa Monica-based Center for Healthy Aging and others.
“We couldn’t do what we do without the generosity of the Segals,” said Monika White, president and chief executive of Center for Healthy Aging, a resource for the elderly and their families. Bequeathing real estate, White said, “is a wonderful way of giving a significant amount of money even if you don’t have the cash.”
The nationwide practice of giving real estate to charity is strongest in California, according to Carla Dearing, president and chief executive of Kentucky-based Foundations of America.
That’s because financial advisors, accustomed to advising clients about gifts of appreciated stock during the dot-com boom of the mid- to late-1990s, quickly moved on to recommending rapidly appreciating real estate when the boom went bust, Dearing said. “The California market was primed for it.”
Although the trend is so new that data are not being tracked regionally or nationally, Dearing said she believes it will “continue to pick up steam over time.”
The California Community Foundation, a Los Angeles-based nonprofit that helps donors set up and manage charitable funds -- one of 650 such organizations nationwide -- has received more than $25 million in real estate gifts since 2000, according to Peter Dunn, director of gift planning. “It’s very Southern California because of the mass of real estate wealth here.”
Real estate giving to the organization is up an estimated 50% from the 1990s, Dunn said. The foundation has received $6 million in real estate gifts this year with at least $5 million more expected by year’s end. In 2002 it received $10 million in real estate donations, which ranged from about $500,000 to $2 million each. Properties must be free of mortgages and other liens or encumbrances.
The foundation takes the property, sells it and distributes funds to charities the donor has chosen. Recipients can include such large institutions as universities and health-care facilities as well as synagogues and churches. The donor can decide where the funds go or can rely on a foundation for referrals to nonprofit organizations.
“We sit down with people and help them identify charities,” said Donna Mumford of the Orange County Community Foundation. “They may have different passions about different things. We help them narrow it down.”
Donors may have a second vacation home, for example, that they no longer want to manage. Or perhaps an aging property owner has capitalized on solid real estate investments and is ready to divest. Commercial and industrial real estate investors are also part of the mix.
Some large organizations, including universities and hospitals, can manage such complex donations themselves. Cedars-Sinai Medical Center, for example, receives an average of three donations of property a year.
USC has received, on average, between 15 and 25 gifts of real estate annually over the last few years, according to Bill Nies, executive director of development and university advancement. The school has employees who assist with such transactions.
“My husband always felt the university gave to us,” said Betty Noble, 77. She and her late husband, Joe, have given $1.8 million in a handful of South Bay real estate donations directly to USC. The Nobles’ donations went to campus libraries and the athletics department. “He was always of the opinion if you make it, you give it back.”
In the case of the Segals, the family set up a donor-advised fund through the California Community Foundation years before Sada Segal died, allowing her to live in her condo until her death.
Not only did various charities receive funds when she died, she received a tax deduction on the value of the condo over three years. And her gift continues to aid the needy.
“We have given to hundreds of groups upon need,” Robert said of the fund, which has grown 5% to 20% a year since Sada Segal’s death as the foundation invests the funds in stocks and bonds to make them grow. “We are doing a lot of positive things in her memory.”
Jack Langson, 55, has donated three pieces of real estate to the Orange County Community Foundation, which has in turn written checks to charities at his request, including the Newport Beach Public Library Foundation. Langson, an avid books-on-tape listener, wants to make sure others can enjoy some simple pleasures.
Another passion of Langson’s is Christian athletics. “We couldn’t do it without guys like Jack,” former NFL player and USC tight end Mark Boyer said of the Fellowship of Christian Athletes, a nonprofit organization that offers sports summer camps and helps student-athletes serve as role models. With the funds Langson has donated through real estate over the years, Boyer said, “he is impacting thousands of kids locally.”
“I had charities I wanted to support,” Langson said. “Any life well lived has to have an element of giving back to society for a cause greater than one’s self. There are a lot of people that need a helping hand.”
Allison B. Cohen can be reached at a.cohen@ix.netcom.com.
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(BEGIN TEXT OF INFOBOX)
Everyone can benefit from charitable donations of real estate
The benefits of donating real estate to charity include avoiding capital gains taxes on the appreciated value of the property and avoiding estate tax. Also, donors receive an income tax deduction equal to the fair market value of the property on the date of the gift.
Different gifts of real estate include:
Outright gifts of real property. The donor takes a charitable deduction on the fair market value of the property, up to 30% of the donor’s adjusted gross income. The donor can carry the charitable deduction over a period of five years. Capital gains taxes are also avoided.
Gift with retained life estate. The donor can live in the property until death, at which time the property is transferred to a foundation, avoiding probate. Tax deduction calculations are made at the time the gift is given based on current interest rates and donor’s age.
Gifts providing income. Known as a charitable remainder trust, this alternative pays the donor an income for life or a term of years. Donors choosing this route avoid capital gains taxes and the property is eventually sold by the trust, which can then take the equity to invest in stocks, bonds or other investments. The donor receives an immediate income tax charitable deduction.
There are eight community foundations in Southern California that meet or exceed national standards for serving their communities. Contact www.lccf.org to find a foundation in your area.
Or for more information, contact the Orange County Community Foundation at (949) 553-4202 or the California Community Foundation at (213) 413-4130.
-- Allison B. Cohen
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Donating a residence
Here’s how the process works: Initially, consult an attorney, tax advisor or certified public accountant for advice on how to make such a donation. Then consult the charity. Larger organizations may be able to go through the process with donors; smaller charities may not, in which case the donor should seek the assistance of a community foundation. The property is given to the charity or foundation, which manages the transaction for a fee that usually ranges from 1% to 3%. Proceeds from the sale are distributed at the donor’s discretion.
-- Allison B. Cohen
