Donate Real Estate
Donate a house | Donate land | Donate commercial real estate
Since 1993, American Endowment Foundation has helped donors give more than
$100 Million in grants to nonprofit organizations.
Experts estimate that approximately $14 trillion will pass from one generation to the next before 2025, and approximately $5.6 trillion of this wealth is held in real estate. This will surpass both publicly traded and closely held stock portfolios combined.
This transfer of wealth is expected to create significant challenges as assets will be freed up from the sale highly appreciated real estate, investments, and transfer of family businesses. If not properly advised, many families will feel the bite of taxes and loss of influence of these meaningful assets.
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Your real estate wealth can be the ideal asset if you are interested in making meaningful charitable gifts while enjoying substantial financial benefits. Since the early 20th century, public policy in the U.S. has offered tax incentives for philanthropic actions. Those incentives, coupled with genuine charitable motivations, create a tremendous opportunity to help your favorite charities.
When you make an outright gift of real estate, you immediately receive important tax benefits. When you make such a gift, you are eligible to take an income tax deduction based on the current fair market value of the property. You may deduct up to 30% of your adjusted gross income in the year of the gift. If the amount is larger than you can use in one year, the surplus can be carried forward as a charitable deduction over the next 5 years. This will also enable you to avoid capital gains tax burdens that may apply, leaving more dollars for your charitable endeavors. Donating real estate to AEF offers powerful solutions to stay involved in these meaningful assets for personal and/or family philanthropy.
In donating real estate, donors often find themselves with a bewildering array of considerations. Here are a few:
A. Donating real estate is both a financial and philanthropic endeavor
Today, donors approach charitable giving with the same commitment they do for financial goals, such as retirement planning and estate planning. They not only want to streamline their philanthropy to free up time, they want flexibility as their philanthropic goals change or develop. They have a better understanding of general finance and investments and are more likely to want a flexible vehicle and independent platform for their family’s philanthropy.
B. Donate real estate, yet maintain accountability
It is important to match the size of the contribution to the capacity of the charity. Capacity is a term that encompasses size, administrative capability, stability and accountability of the board. Are the charity’s administrative expenses reasonable? Does the charity have the sophistication to use a large gift effectively? Large grants can be like a heavy rock dropped into the bottom of a small boat. Many small charities have become divided over large contributions due to the lack of a clear strategic plan, clear policies and investment experience. Also, some charities may treat contributions as “free money” and use them to pay for fundraising and administrative expenses, which is usually not what the donor has intended.
American Endowment Foundation is a great way to organize and maximize your charitable gift of real estate, recieve maximum tax advantages, and support your favorite charities on a flexible time table.
C. Real estate handling considerations
Donors considering charitable contributions of illiquid, non-cash assets, like real estate, should be aware that:
- Smaller charities are often not equipped to handle gifts of illiquid, non-cash assets. If accepted, the liquidation may be poorly handled, resulting in fewer dollars to charity.
- Breaking up concentrated holdings for distribution to multiple charities creates execution challenges.
- Most large charities want to liquidate a donation of real estate assets immediately. This may not be what the donor has intended.
- Donations of real estate to a private foundation offers little ability to capture the appreciated value for tax purposes.
D. Prevent mismanagement of contributions
Donors may have concerns that the value of their charitable investments will be eroded with poor investment decisions, particularly with smaller charities. See investment flexibility
E. Recognition or Privacy
Charitable giving can also be quite personal. Some donors want full recognition in their grant making endeavors. For example, a donor may want to personalize their grant making with a family name (e.g., “The Smith Family Charitable Fund”), involve family members in recommending grants, and name successors, so that the account can continue for generations. Others may prefer more privacy. Common privacy concerns include:
- Being besieged by grant requests.
- Protecting children from unwanted exposure.
- Avoid having their personal lives come under scrutiny.
- Confidentiality in governance of the family foundation.
- Feeling that their grant making may create awkward circumstances in their community.
F. Opportunities for Family Involvement
In addition to the tax and financial planning benefits, donors often establish their family foundation at AEF as:
- A bridge for families that are geographically dispersed.
- An establishment of a family purpose and team spirit.
- A forum for meaningful intergenerational communication.
- Training wheels for preparing heirs to receive wealth.
- A way to remember or memorialize a loved one.
If you own real estate, you may have many goals associated with it. In this website, we show you some of the exciting ways a gift of real estate to American Endowment Foundation can help you achieve your goals…and create a lasting legacy to support your favorite charities.
For more information: www.AEFonline.org
Or call us at 1-888-440-4233
”We are proud to announce American Endowment Foundation has earned our eighth consecutive 4-star rating for its ability to efficiently manage and grow its finances. Only 1% of the charities we rate have received at least 8 consecutive 4-star evaluations, indicating that American Endowment Foundation consistently executes its mission in a fiscally responsible way, and outperforms most other charities in America.”
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