Posted November 1st, 2002

Realizing Real Estate Gifts

Sterling Kerr, Ph.D., Director of Gift Planning for the AARP Andrus Foundation in Washington, D.C., has recently enjoyed significant success with gifts of real estate. In this month’s “Gift Planner Profile,” Mr. Kerr shares with Give & Take some of the strategies, tips, and techniques that have helped the AARP Andrus Foundation thrive in times of financial challenges.

Give & Take: What led you to work in development?

Kerr: After retiring from a career as an investment advisor/Certified Financial Planner (CFP), I decided to go back to work and give something back to society. I have now been working with the AARP Andrus Foundation for about two years. Immediately prior to the AARP, I was with SUNY Potsdam where I raised money almost exclusively for the excellent Crane School of Music.

Give & Take: What do you like most about working in development?

Kerr: For most of my adult life I have worked closely with affluent individuals over the age of 60. My most rewarding moments have been the one-on-one experiences with benevolent seniors who have acquired a sense of trust in my ability to assist them.

Give & Take: What have you found to be some of the best ways to communicate with your donors and get them interested in supporting your organization?

Kerr: A combination of creative communication and marketing helps our Foundation best serve our constituency these days. My letter to those I would like to visit with when traveling always clearly states that I will not make a solicitation at the time of our appointment. Visits are mostly designed to build relationships by asking questions as a means of acquiring information. At the appointment, I often use a storybook marketing technique called the “Andrus Story.” It is a storybook or album of articles, pictures, and reports on programs, research activities, student awards, etc. To the extent there is an “ask,” that comes later after listening to their needs, determining their capability to give, formulating an appropriate gift plan, such as a gift annuity or a lead trust, and carefully laying out the proposed gift in letter form with follow-up telephone calls and visits as the case dictates. The secret of success is in listening, developing genuine relationships, serving their needs (the donor comes first), and helping the donor give when it feels right.

Give & Take: Are you seeing any particular trends lately in the types of gifts received?

Kerr: Because of the decline in interest rates, which has affected CDs, money markets, and bonds, and the depressed stock market, many older Americans have shifted their attention from variable income types of gifts like the unitrust to gifts such as the charitable gift annuity that offer a fixed income alternative. The high fixed payment rate and the backing of the gift annuity with the full assets of the Foundation (versus only the assets of the trust) are quite compelling to the prospective donors who recall the Depression era. Our very low-interest-rate economy has also given rise to more questions about lead trusts. This is particularly true of affluent donors who are considering ways to transfer assets to family members while minimizing gift and estate taxes. Few attorneys, however, seem to be articulating this planning tool to their clients, so it behooves gift planners to educate their prospects.

Give & Take: I understand you have had success with gifts of real estate. What specific marketing and other strategies did you employ to help engender interest in those gifts?

Kerr: The most exciting large gifts recently are coming in the form of real estate. We run articles about the potential benefits of gifts of real estate in our gift planning newsletter, Successful Planning, and in the AARP’s magazine, Modern Maturity. Personal visits with donors around the country have resulted in a number of real property gifts of considerable magnitude, including the following:

1. In Kansas a home was sold by auction that yielded a profit of about $200,000 more than was expected by the donors. A portion of the $550,000 was retained for a condominium in Florida and the remainder established a charitable gift annuity to supplement their retirement income.

2. A San Francisco home sold for $2.3 million and funded a charitable gift annuity. This annuity provides a monthly income that is more than sufficient to meet the costs of a retirement living facility for the 81-year-old donor.

3. A couple in Silicon Valley moved to one of their rental properties and placed the $1 million proceeds of their highly appreciated residence in a self-trusteed charitable remainder trust.

4. A west coast family will deposit a $1 million income producing property into a non-grantor lead trust along with some marketable stock. The income from the building and the periodic sale of the stock is enough to provide a 5% income stream of $50,000 dollars per year to the Foundation for 5 years. At the end of the 5-year trust, the two adult sons receive the property and the wealthy parents have minimized their estate and gift taxes.

Give & Take: What are some of the best tips and advice you have received over the years?

Kerr: First, develop relationships. Intelligent gift planners can garner technical knowledge through excellent literature and outside sources, but technicians with poor people skills will struggle. Get out and visit donors as often as possible. Also, use the law of large numbers. If you are seeing and communicating with a large number of persons, some will become donors. Try to manage between 50 and 75 prospective gift situations at a time. Make sure that you are working on a mix that includes the financially modest and more ambitious cases. The more routine gifts pay the bills and the larger gifts allow you to be successful.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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