Ormita In-Kind Donations Guide

May 15, 2018 | Author: Jonathan Mitchell | Category: Donation, Debits And Credits, Taxes, Sales, Nonprofit Organization
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In-Kind Donations A guide to unlocking unlocking hidden resources or your organization

 www.ormita.com

Table o Contents Overview .................................................................................................................2  What are “in-kind” donations? .............................................................................. ............................................................ .................. 3  Why accept “in-kind” “in-kind” donations? ................................................................... .................................. ........................................ .......3 3 How donors beneft rom giving in-kind donations ............................................. ................................ .............4 4  What is Ormita .......................................................................................................5 Trading “In-Kind” “In-Kind” Donations ......................................................... ........................ ........................................................ ....................... 6 Global Product Placement and Sourcing ..............................................................7 National Distribution Channels ............................................................................8 Facts and Figures about Non-Cash Trade ........................................................... 0 The Process ........................................................................................................... Roles and Responsibilities ...................................................................................4 Marketing Support ...............................................................................................5 The New York York Times Times (Beyond the Git o Cold, Hard Cash) .............................. 6

© Ormita International Limited. All rights reserved worldwide. This book is intended as a ree resource to assist Non-Prot Organizations in getting the most out o the Non-Prot In-Kind Donation Program and is not intended or recommended or any other purpose. It may be reely distributed on the condition that it is not altered any way. Although we have taken great care to ensure the accuracy o the inormation and advice in this book, neither Ormita International Limited, Ormita International LLC nor any o our licensees, guarantees the correctness, relevance or accuracy o anything in this document or any web resource linked to rom this document. Ormita International, its owners and related companies / related individuals disclaims responsibility or any direct or indirect damage or loss resulting rom the use o this document and any direct or indirect loss or damage resulting rom reliance on inormation published herein. The service oering described in this document is subject to change without notice.



Overview In his book, the Mystery o Capital, Hernando De Soto calls unproductive, unsold assets “dead capital” and estimates there is 9.3 trillion dollars of it world-wide. Unsold production time, empty rooms, rooms , unlled advertising space, vacant appointment time, depreciating inventory, inventory, mislabelled stock, end-o-line items, last seasons merchandise, entry tickets or idle assets are all items which can be donated to non-proft organizations organizations in need . For some businesses, providing in-kind donations to organizations doing good work in their community is the easiest way they can support you. They may may not be able to provide direct nancial donations, but it’s ar easier or them to simply share resources or expertise they already have. Unortunately, Unortunately, due to lack o storage capacity, issues with handling, inappropriateness o the donated item or other logistical issues, many non-prot organizations turn away a constant supply o substantial in-kind donations, most o which end up in landlls. Ormita oers the opportunity or your organization to accept virtually any in-kind donation and turn it into things that you need. • Using the Ormita trading platorm, your organization can trade unwanted in-kind donations or essential goods and services that you need. • There is little to no handling o the products by your organization. • Our sta is courteous and proessional and will always treat your donors with respect, ensuring that they will return to your organization the next time they have a charitable donation to make. • We strive to make donating a hassle ree experience. • There is no ee or our service to your organization or your donors. • You  You receive the maximum possible return rom donated goods and services. • Our solution is environmentally riendly and socially responsible.

There are billions o dollars o goods and services just waiting to be accessed by your organization through the Ormita in-kind donation program.

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“Supplement your cash with new “in-kind” donations? An “in-kind” donation is a contribution o time, service or goods made by a donor to help support the operations or services provided by your organization. It isn’t cash. Thereore Thereore the donor does retain a degree o control over the donation. This doesn’t occur when a donor gives you a cash donation. Because o this “relationship”, donors products need to be used eectively and eciently. eciently. They also need to know that their product is not going to end up on-sold to a competitor or an existing cash customer. Some examples o in-kind donations include: • Books • Food supplies • Medical kits • Oce equipment • Printing • Rereshments • Telecommunications equipment

 Why accept a ccept “in-kind” donat donations? ions? . You .  You can acquire goods and services that you need without spending cash The cash you save can be used to pay or other products or services that you have not been able to acquire through the Ormita donation process.

2. Expands your capacity Your organization can suddenly acquire goods and services which you otherwise might never have purchased. More printing, radio advertising, better equipment etc.

3. Builds relationships Approaching a prospective donor and receiving an in-kind donation provides an opportunity or that person or organization to support your cause without actually investing any cash. I the donor likes how the donation issue is handled, gets a tax benet or nds that their product is placed in a new market, they may take an even greater interest in the activities o your organization. An in-kind donation can be the beginning step o a substantial rela tionship.

4. Provides a way or your donors to continue giving during tough times An in-kind git’s market value value can be more than double the value o a cash donation rom the same donor, since the git’s cost to the donor is only the product’s marginal cost, which might be only hal o its market price. Moreover, many corporations have spare capacity that they could put to use or nonprots at a negligible extra cost to themselves; or example, transportation or shipping companies may have spare container space; IT consultancies, temporarily underutilized communications engineers.

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How donors beneft rom giving in-kind donations Manuacturers, Wholesalers Wholesalers and Retailers • Takes excess product o-market, thereby retaining the market value or their goods. • Tax-deductible benets may be greater than income received rom a sale. • Creates savings in warehouse space, disposal costs and sta time • I they plan to close or consolidate a warehouse or distribution centre, it may be more cost-eective to donate that inventory rather than move it to another location. • Helps to reduce waste and meet environmental goals. • Sta and customers want to see their surplus goods going to people in need rather than to the dump. • Donated goods are generally only deductible at cost (not market value). Using the Ormita In-Kind Donation Program their donation is eligible or a tax deduction at ull retail value. • Ormita eectively converts items which a charity may not be able to directly use into goods and services they need. • A single email or phone call to Ormita can take all o their surpluses o their hands.

Service Industries • Allows or a ull retail value tax deduction or surplus time, space, unsold seats or service-related oerings. • Provides a creative way or sta to give to their nominated charities without the need or time-o  or cash rom their pockets. • Can help ull a company’s company’s philanthropic, environmental and/or social welare goals and translate into goodwill.

General Benets or Businesses • Businesses who donate trade credits receive the up-ront tax benets at the time o donation even though they may may only earn the trade credits at a later date. • Allows businesses to tie their giving to your sales or customer activities without spending any additional cash to do so.

 When a business makes a donation to charity it comes out o their proft margins. In-kind donations are a way to reduce their idle production time, increase sta loyalty, loyalty, create goodwill and publicity and access tax deductions.

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 What is Ormita Ormita acts as a clearinghouse or the trade o excess capacities, goods and services through a combination o online e-commerce, clearing, 24 hour telephone brokering and independent licensees and brokers. At the core o the business is an electronic trading platorm that allows participants to trade their excess capacity or unsold time or: • Cash-fow enhancing products and/or services (advertising, media, public relations, special promotions, new product lines, lines , employee rewards, customer incentives etc). • Already budgeted or products and/or services. • Investments in new micro-enterprise and small businesses. Rather than promoting direct trade between participants the Company brokers trades through a centralized marketplace.

. Transactions are recorded in a centralized “ledger” which records the value o the items purchased (debit) and sold (credit) - much like a clearinghouse does or stocks, or a commercial bank  does or checks. 2. This ledger system utilises a “trade credit” as a method o accounting with 1 Trade Trade Credit = $1. 3. Just like any brokerage rm, Ormita receives a cash commission on each transaction. 4. Non-prot donor and recipient transactions are not subject to this commission as they all within the boundaries o the Company’s Company’s Corporate Social Responsibility Charter.

Radio Station • Donates $2000 worth o Advertising • Sells Advertising

Printer • Sells Printing • Buys Advertising • Buys Accounting

 Accountant • Buys Advertising • Buys Printing • Donates to Charity

Charity • Receives Donations • Buys Printing • Buys Accounting

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Tradi rading ng “In“In-Kin Kind” d” Dona Donatio tions ns Ormita provides non-prot organizations the option to exchange their donated goods or services with other organizations in return or things that they need. Instead o trading goods and services directly, a non-prot organization will list their donated product with Ormita and sell it to another organization or “Ormita “Ormita Credits”. Ormita Credits record the real market value or the products or services acquired by each organization. 1 Ormita Credit = $1 or the sake o book-keeping. These Credits can then be used to acquire other market-value goods or services without the need or cash.

Receives an oer or some donated school books

Charity

School

Needs some school books

Needs a photocopier

Community Group

Receives an oer or some donated printing credit Needs some medical equipment

Receives oer or donated medical equipment

 Welare Organization

Receives oer or a donated photocopier Needs some printing

Ormita enables charities to tap into a donation source that: • is dicult or many charities to handle • may require additional experience/expertise • is currently a tiny part o overall charitable giving • could add 10 to 30 percent to a charity’s charity’s annual donations

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Global Product Placement and Sourcing Ormita operates its own inrastructure in 38 locations on 5 continents. We have local contact points across the United States, Australia, New Zealand, Italy and the United Kingdom as well as regional contacts in the major cities o 44 countries. Ormita can place donated products into new markets, allowing companies to trial their products, create brand awareness or their goods and services and establish a presence in an a new or expanding market while contributing to your organizations welare.

Countries where we can place, and source, donated products include: Australia

Denmark 

Lithuania

Scotland

Argentina

Estonia

Malaysia

South Arica

Belgium

Finland

Mexico

Spain

Bahrain

France

Netherlands

Sweden

Brazil

Guatemala

New Zealand

Switzerland

Bulgaria

Hungary

Norway

Thailand

Canada

Ireland

Pakistan

Turkey

Chile

Israel

Panama

United Kingdom

Croatia

Italy

Poland

Cyprus

 Japan

Peru

United States o America

Czech Republic

Latvia

Romania

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National Distribution Channels Australia Adelaide Gold Coast Bunbury Campbelltown Canberra Dubbo

Gosord Hobart Kalgoorlie Kuala Lumpur Mandurah Newcastle

Penrith Perth Tamworth Townsville Wollongong

United States o America Atlanta Austin Baltimore Boise Boston Chicago Columbus Dallas Denver

Detroit Fort Worth Houston Las Vega Vegass Los Angeles Memphis New York York City Newark  Orlando

Philadelphia Phoenix Pittsburgh Salt Lake City San Francisco San Jose Seattle Tampa Washington

United Kingdom Basildon Birmingham Blackburn Blackpool Bolton Bradord Bristol Chelmsord Coventry Derby Dundee Edinburgh

Glasgow Gloucester Hudderseld Ipswich Kingston upon Hull Leeds Leicester Liverpool London Manchester Newport Norwich

Nottingham Oxord Peterborough Plymouth Preston Reading Rotherham Saint Helens Sheeld Swansea Swindon Watord

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National Distribution Channels New Zealand Auckland Christchurch

Dunedin

Wellington

Genova Messina Padova Palermo Rome

Taranto Torino  Verona St. Vincent

Italy Bari Bologna Brescia Cagliari Florence



Facts and Figures about Non-Cash Trade According to the World Trade Organization 15% o world trade is conducted on a non-cash basis. basis . This includes direct trade, git-culture, counter-trade/reciprocal trade (oten ound between governments and multi-national organizations) and non-government currencies (community currencies, regional currencies, git vouchers, loyalty loyalty points & air-points) a ir-points) and is thereore worth approximately USD $2.79 trillion dollars o  the estimated USD $18.6 trillion dollars o world trade (2004 World World Bank gures). More recent gures are currently unavailable but it is known that global trade rose in 2004 by 21% (world merchandise exports rose by 16% to $7.3 trillion, while commercial services ollowed closely with a growth rate o 12% to $1.8 trillion) and it is estimated that this rise has carried steadily stea dily onwards through to 2006, making non-cash trade orecast at between $3.37 trillion (2005) and $4.08 trillion (2006). The International Reciprocal Trade Trade Association (IRTA) targets trade credit use at 4% o business spending. With business spending making up 10% o the USD $34 trillion dollar economy – utilizing trade is a USD $136 billion dollar opportunity. opportunity. • Non-cash trade, in one orm or another, accounts or nearly 30 percent o the world’s total business.1 • The National Association o Trade Trade Exchanges, The The International Journal o Hospitality Management and the Michigan State University together claim that approximately 70% o  all Fortune 500 companies utilize oset trading.2 • According to the Association o Advertising Agencies, eight out o ten corporations engage in excess capacity exchange. 3 • Approximately 65% o all New York Stock Exchange-listed companies engage in excess capacity exchange.4 • In 1994, on the 60th anniversary o the Swiss WIR excess capacity trade system, annual volume in reached 2.5 billion Swiss Francs (over $2 billion US dollars) and boasted 80,000 members nationally.5 The WIR also enjoys a membership base o nearly 20% o all Swiss businesses in a country o only 7 million people. 6 • At its peak in 2001-2002, an estimated 6 to 10 million Argentines participated in the Red Global de Trueque local commodity exchange system, including doctors, manuacturers, and even railways, turning over approximately 6 billion US dollars per annum in transactions and accounted or approximately 15% o  Argentina’s  Argentina’s mean personal income. 7 • According to the International Reciprocal Trade Trade Association approximately 400,000 businesses engage in ormalised non-cash transactions in the United States .8

1 2

3 4 5 6 7

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(2004)., Department o Commerce Fact Sheet. USA DOC. Schmidgall, R.S., Damitio, Damitio, J.W. (1999)., Bartering Bartering activities o the Fortune 500 and hospitality lodging rms., Michigan State University, International Journal o Hospitality Management American Association o Advertising Agencies. (2003). (2004)., Annual Report, National Association o Trade Exchanges Lietaer, B & Belgin, S. (2004)., O Human Wealth: Wealth: Beyond Greed & Scarcity. Galley Edition. Valentini, E. (2003)., Switzerland’s WIR System and Barter Worldwide, International Trade Currency System Stodder, J. (2007).,Residual Barter Networks and Macro-Economic Stability. Stability. Rensselaer Polytechnic Polytechnic Institute at Hartord, Hartord CT. (2004)., Fact Sheet, International Reciprocal Trade Association.

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The Process 1. Analyse your existing expenses Review your current budget and look or expenses that you may be able to substitute or goods o r services acquired through the Ormita Non-Prot Donation Program. Make a list o these expenses along with specics (i.e. photocopier toner or a Minolta SCX-1010, 500 single person tents o any color etc).

2. Brainstorm a list o “wants” Write down all o the things you would like to acquire i you had access to additional unds.

3. Calculate the value total o what you need Add your “needs” “needs” and “wants” together and calculate the rough value o these products and services at ull market value.

Remember – everything you want can be yours. The beauty o the Ormita Non-Prot Donor Program is that you do not need to source any o the things you want directly rom companies – all you need to do is locate products and services which other non-prots or businesses may be interested in trading. In return, they may acquire goods and services you need and trade them back to you. By working together to acquire a large range o “promised” goods and services, services , non-prot organizations can exchange these gits with one another on a non-cash basis a nd ull their needs. No delivery needs to take place until a “buy” or “sell” has occurred and, in most cases, the donor will arrange delivery ree o charge. (Where this does not occur the recipient may have to pay their own reight costs.)

4. Research existing and potential donors Any business who supports your current activities is a great potential donor. Use the internet, phone book and connections established by your volunteers and identiy those organizations that may have surplus products or time, brand power, and most importantly, similar values and mission as your group.  Your  Your donors should support your aims (they are donating to  your charity even though the product may end up somewhere else). Once you have identied these organizations - research them. It is important to understand how they operate and who to talk to i you wish to solicit an in-kind donation. It is always important to remember: while Heinz Foods may be the perect group to supply you a particular product you need directly, directly, i it is not local then you are better o o  talking to businesses who you can access easily and then trade their product using Ormita or other goods and services you need. The benet to the donor is the same – and you receive even greater access to donated products and services than beore. Every non-prot is eectively “pitching in” to grow the pool o o  available goods and services or one another.

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5. Meet with potential donors Contact the organization and schedule a meeting with their owner, public public aairs executive or a manager with decision-making power. Explain to the individual the nature o the conversation you would like to have – to discuss options or in-kind donations which, in turn, will generate publicity or them, increase their sta moral, boost their brand image and recover lost income by turning it into a tax deduction. I a donor is local in several markets but not present in others, there may be an additional benet or them to have their product traded into another country where they are looking to gain market exposure.

Ormita has a donor product brochure and power-point presentation which you are able to customize or your own use when visiting with potential donors.

6. Analyse their needs • Clearing surplus stock (in some instances donating is cheaper than destroying surplus products) • Corporate Social Responsibility requirements • Create positive publicity • Entry into oreign markets • Increase brand awareness • Moving warehouses • Taking seasonal products o-market • Tax benets • Trialling new products o-market

7. Submit your request Customize the Sample In-Kind Donation Solicitation Letter provided in the Ormita Toolkit Toolkit and deliver the letter and accompanying materials to the appropriate decision-maker in the organization. Give the organization reasonable time to review and approve the donation request and to negotiate the acknowledgements they want in exchange. Follow-up the letter with a personal visit or telephone call.

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8. Fill out the In-Kind Donation Form Once the organizations has conrmed that they are interested in donating, have them complete an In-Kind Donation Form. This orm is an “oer to supply” only and is subject to another charity or organization wishing to take the oered goods or services. Send this orm into Ormita.

9. Ormita will market the donation and, in return, nd you what you need Ormita will market the donation to other organizations at ull-retail value. Once the donation has been accepted, Ormita will arrange the logistics o reight a nd ullment on your behal.  You  You will now receive credit to acquire goods and services rom other non-prots – and businesses – within the Ormita commerce network.  You  You can access products online, in our weekly newsletter or directly rom your assigned Broker.

The entire process rom ro m receiving donation “oers” through to settlement settle ment and acquisition o o  your own goods and services may range rom 10 – 90 days. Patience is a virtue. As more businesses and non-prot organizations participate in the programme, more oerings will become available and the process will become aster. Accounting or the value o donated goods and services is done on a “ull market value” basis. Where a donated product is slow to move, there may be a need or a discount to speed up the process. This This is entirely up to you.

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Roles and Responsibilities Non-Prot Organizations Responsibilities • Familiarize its employees and volunteers with the eatures and benets o the Ormita In-Kind Donation service. • Issue a joint-press-release about the partnership. • Publish inormation about Ormita in its newsletter at least once every 12 months. • Identiy suitable donors and speak to them directly about giving in-kind donations to your organization. • Have them ll out an In-Kind Donation Form . • Where you have talked directly to them about how you will handle the donation process: submit the completed In-Kind Donation Form to Ormita. • Monitor your account online and, once the donation is sold to another organization, access the credits received rom the sale to acquire your own needed goods and services.

Ormita Responsibilities • Provide Non-Prot Organizations with sales and marketing material to assist with the promotion o the In-Kind Donation Program to their donors. • Provide training material to educate their employees and volunteers regarding the Ormita range o solutions. • Issue joint press releases about the organization joining the program and the benets o the InKind Donation Program. • Handle all aspects o the exchange process, including marketing the donated goods received to other members o Ormita, crediting your donor account and helping you acquire other oered needed products and services in return. • Handing all customer enquiries in a proessional manner.

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Marketing Support All Ormita Non-Prot Organizations are backed by wide-ranging resources available through Ormita’s sales and marketing support teams.

Sales Support I required, the Ormita sales orce can work with the organization to capitalize on in-kind donation opportunities, including in participating in joint sales calls. To make a sales call booking email a[email protected] or call your assigned Client Director.

Marketing Material Ormita will provide the organization with access to our online Marketing Library which contains a range o valuable materials to help promote in-kind giving to their donors. Material includes sales presentations, solutions bries, brochures and case studies.

Newsletter Ormita keeps its non-prot partners up-to-date with news about goods and services that are available through e-mail newsletters.

Online Trading Non-Prot Organizations can buy and sell online, request pricing, check their account balance, change their details, manage sub-accounts, transer credits and more.

24x7 Telephone Support Ormita oers 24x7 telephone support to help each o our non-prot partners nd what they are looking or in an emergency.

Training Ormita knows that the best trained and best prepared partners achieve greater success. Ormita has invested in eective education and training resources which it provides to its partners.

Logo Usage Approved organizations may use the Ormita logo to promote their association with Ormita. Please see the Ormita Corporate Brand Manual or the rules governing the use o our logo.

Public Relations Support When a key transaction is successully closed, Ormita works with the organization and the customer to spread the word.

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 November 12, 2007

Beyond the Gift of Cold, Hard Cash By Deborah L. Jacobs AMONG the items that Tom Bird gave to charity last year was what he considered a “lingering asset” on his personal  balance sheet: the domain name, farm.com, which he retained when he and his business partner sold their Silicon Valley Valley record storage company, First American Record Management (FARM) in 1999. Sensing a ready market for the dormant address, Mr. Bird, who is now a venture capitalist, approached the Boston Foundation about taking it. The charity readily agreed, and within a month sold it for $200,000. Mr. Bird got a corresponding tax write-off for his donation, which had cost him nothing but a nominal registration fee 18 years earlier and annual renewal fees. The contribution is one example of how innovative donors and open-minded charities are moving beyond traditional gifts of cash and marketable securities and beneting from donations of noncash assets. Although Although real estate remains the most  popular type of noncash gift, charities have also accepted tangible personal property like art, jewellery and collectibles, and intangible assets like patents or shares in a closely held business. Statistics are scarce, but Ruben D. Orduña, vice president of the Boston Foundation, said that most of the organization’s organization’s larger gifts last year included a noncash asset. “Often the kinds of assets that wealthy people have available to donate are things other than cash and marketable securities,” Mr. Orduña said. Such donations require donors to navigate potential tax traps, have the property appraised, and nd an appreciative recipient who will most often sell the asset. But for those who make the effort, it provides an alternative to checkbook   philanthropy and a way to still give regardless of stock market performance. Bryan Clontz, president of Charitable Solutions, a Jacksonville, Fla., rm that helps charities liquidate noncash assets, said he got more calls about these types of donations when the market was down.

As with publicly traded securities, there are tax incentives for the donor to make gifts of property that has gone up in value, said Ralph E. Lerner, a lawyer with Sidley Austin Brown & Wood, in New York. One is the savings in long-term capital gains tax, which is 15 percent for sales of appreciated business interests and real estate held at least 12 months, m onths, and 28 percent for tangible personal property like art and collectibles. Since the charity is tax exempt, it generally pays no tax when it sells the asset. In the best-case scenario, you can also deduct the fair-market value of the asset at the time of the donation, rather than what you paid for it. When making gifts to a public charity, charity, donors are entitled to a deduction for up to 30 percent of adjusted gross income.

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Any deduction that can’t be taken in the year of the donation — say, because the donor’s income isn’t high enough  — can be carried forward up to ve years. Alistair Barnes, a property manager with Global Special Risks in Houston, gures that his donation of a 3 percent share in the company, a privately held insurance rm, two months before its May 2007 sale, will entitle him to a $292,000 deduction in April. For tangible personal property, something you can touch and move, a restriction known as the related-use rule applies. For your donation to qualify for a full fair-market value deduction, the charity must use the asset in a way that is related to its exempt purpose, said Conrad Teitell, a lawyer with Cummings & Lockwood in Stamford, Conn. Otherwise, your  income-tax deduction is limited to your basis in the asset (what it initially cost you) or its fair market value, whichever is less. The related-use rule is not a problem for gifts of art to a museum with similar works in its collection, but it affects other  types of gifts to institutions that plan to convert them to cash. Some clients are surprised to nd themselves constrained  by this rule when they donate items to be auctioned at the annual church or school bazaar, said Laura Peebles, a director  with Deloitte & Touche in Washington. Gifts of real estate are not subject to the related-use rule. One of the more unusual ones was a tandem crypt donated to the University of California at Los Angeles. Situated at Westwood Memorial Park, a cemetery where many Hollywood stars are buried, the crypt was near Marilyn Monroe’s grave, said Judith Pillon, director of the ofce of gift planning at U.C.L.A. The university sold it to someone in the entertainment industry for $100,000, Ms. Pillon said. There are many ways to contribute real estate and reap large tax benets, but these donations carry complications of their  own, said David T. Leibell, a lawyer with Wiggin and Dana in Stamford, Conn. Most charities prefer that the property not be mortgaged because it can run afoul of various tax law restrictions. Moreover, the nonprot, as if it were buying the property, must check for liens and be sure there are no environmental hazards that would require cleanup obligations under federal law.

Charities are not bashful about looking a gift horse in the mouth. Jane Wilton, the general counsel of the New York  Community Trust, said that one time the group declined a gift of a Brooklyn gas station because it was concerned about environmental hazards.

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