[2011] Anyone used "Donate for a Cause?"

[arc918]

FWIW - I would not take any income tax advice from those in the business to selling/reselling timeshares...

YMMV

 

[scooter]

Actually, DFAC is quoting me a figure lower than $1800. Maybe it varies from property to property??

So...here is my main question. I absolutely agree that it's better to give away the unit for free than to pay for a donation.

But what if no one will take it--even for free? What other options do I have? $439 a year in dues isn't much, but it aggravates me to pay it when I don't use the unit or can't fit a good RCI trade into my schedule. So....how do you unload it if an individual won't take it --even for free!!

Most local schools have a fundraiser aution or raffle. You can donate it to them and take the deduction.

 

[T_R_Oglodyte]

Most local schools have a fundraiser aution or raffle. You can donate it to them and take the deduction.

What donation deduction is that?? While a person is allowed to deduct the Fair Market Value, if the timeshare is given away because it can't be sold, the Fair Market Value is zero.

 

[arc918]

What donation is that?? While a person is allowed to deduct the Fair Market Value, if the timeshare is given away because it can't be sold, the Fair Market Value is zero.

correct - if you can't even give it away on ebay, it is has ZERO value when donated

 

[DeniseM]

Most local schools have a fundraiser aution or raffle. You can donate it to them and take the deduction.

I would never do this to an unsuspecting victim who probably has no idea what they are getting into.

I'd try giving it away to a knowledgable buyer, first (see above.)

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

I find it a bit shocking how little regard there is for accuracy or investigation prior to slandering an organization on this site. I founded Donate For A Cause in August 2004. I am also an attorney. Let me clarify some of the mis-perceptions and outright untruths stated on this thread of conversation.

1. The moderator stated that "Donate For A Cause itself is not a charity.” This is 100% inaccurate. Project Philanthropy received its 501(c)(3) letter from the IRS on June 25, 2006 with an EIN # of 20-4862885. On July 13, 2006 Project Philanthropy filed for the right to use Donate For A Cause as an assumed business name with the Montana Secretary of State. Therefore, Donate For A Cause is technically Project Philanthropy which is an active and recognized 501(c)(3) charitable organization.

2. It has been stated here that "[DFC's] tax deduction is bogus" and "timeshare deduction an unfortunate (and blatantly false) misrepresentation by DFAC". These are also inaccurate statements. IRS Publication 526 clearly outlines the right to take a tax deduction for a charitable donation of real property. It also clearly states that you may deduct the fair market value (“FMV”) of that property. DFC never advises a donor of the FMV that they should claim. We offer to have the property appraised by a 3rd party licensed appraiser in order to determine that amount. Wisely, approximately, 95% of our donors opt to have their property appraised. Therefore, the FMV claimed is determined by a 3rd party who is trained and licensed to determine FMV. In addition, licensed appraisers must subject themselves to IRS penalty for failure to follow accepted appraisal standards and procedures while determine FMV. If the donor does not want to use an appraiser than it is up to them to determine the value of the property they donated.

DFC has raised approximately $3.5 million for charities through our donation program. 20% of our donors pay nothing to donate (depending on the value of their property). The 80% that have to pay us a fee, so that we can transfer the property to the charity and in addition offer the property for sale with no closing cost to the eventual owner, have a 100% money back guarantee promising that if we can’t perform as promised they get 100% of their proceeds returned to them. There are many non-reputable people doing business on the timeshare resale market. DFC is not one of them. We perform 100% or your money back. We give people a value which they would not find elsewhere. We raise millions of dollars for great charities like the American Cancer Society, Feed the Children and National Parkinson Foundation. I’m not sure how we became the focus of this scorn but I truly believe it is unwarranted. If you have any questions regarding this post or the donation process feel free to call me at [phone number removed.]

James P. Tarpey, Esq.

 

[DeniseM]

DFC Answers - One of your employees posted on TUG and stated that your affiliated appraisers usually provide apparaisals at 80% of original retail.

Anyone who knows anything about timeshares knows that an appraisal for 80% of retail cannot be a valid appraisal in this market.

So I am basing my posts on what your employee stated on TUG.

BTW - when it was pointed out to your employee that he was posting on an open forum and admitting fraud, he quickly deleted all his posts, and disappeared.

And then there is this: $127,464 in donations to charitable organizations out of $272,666 in expenses - (from Statement 2 of their IRS Form 990).

I find your business model MORE than a little bit shocking...

 

[LannyPC]

Possible Suggestion?

Since we seem to get many inquiries on these boards about donating timeshares to charity, has there been any consideration to having a "sticky" on these boards about donating timeshares?

I know in TUG's advice section that there is a write-up about donating timeshares to charities:

http://www.tug2.net/advice/TUG_Taxes_and_Timeshares.htm

but that just discusses the tax issue.

Many more questions arise (seemingly repeatedly) regarding the financial benefits, viability, etc.

 

[TUGBrian]

is a separate advice article just for that

http://www.tug2.net/timeshare_advice/can_I_donate_my_timeshare_and_get_a_tax_deduction.html

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

Maybe you need to get more facts before accusing people of fraud. My employee left your conversation because every time we explain ourselves its met with another barrage of baseless accusations from you. Appraisals are more complicated than you think. If a resort has an active sales line then those sales are also reported to the assessor's office and therefore affect the FMV of all units in that development. Some people who have donated bought on the resale market and therefore the appraisal may come in higher than their original sales price. These, and many other factors, affect the appraised value of these properties. You have neither a background in law, taxes nor appraisals. Why don't you just advise people to seek profession tax advice before considering donating instead of giving them your uneducated opinion. I'm sorry if that sounds mean but we get donations from CPA's, attorneys and financial advisors everyday. They know the tax consequences and they support this donation program.

 

[DeniseM]

Ahhhh, so one must be an attorney or a CPA to understand how the same timeshare can be worthless on the resale market, AND receive an appraisal of 80% of original retail from your appraisers. No wonder I don't get it - I was just using common sense!

The facts I posted above speak for themselves, and I think Tuggers are quite capable of coming to their own conclusions, without a law degree.

As always, this is my personal opionion.

 

[Dave M]

Kudos, Denise!

Someone who claims that a timeshare which cost (for example) $15,000 and can now be sold for only $500 in the resale marketplace has a fair market value of anything more than $500 (give or take a few hundred bucks) has no understanding of the tax law in this area. Further, for a business owner who claims to understand this area of tax law to quote Publication 526 is ludicrous. That Publication doesn't include the details for how an appraisal is to be performed for an asset over $5,000.

However, the valuation and appraisal rules, as included in the income tax regulations are clear. Fair market value, according to the IRS, is the price at which the timeshare would sell between a willing buyer and a willing seller in the marketplace to which the buyer and seller have access. That marketplace is the resale market. The seller can't sell to the developer (or anyone else) at developer prices or any other amount much above zero or the owner trying to maximize economic recovery would try to sell rather than give it away.

Accordingly, in my example, the fair market value for tax deduction purposes is $500. Further, as stated by others above, the $1,800 fee (or whatever the fee amount is) is clearly not deductible as a charitable donation or as anything else. The costs associated with making a donation are not deductible.

I'll stake my 40+ years as a CPA, mostly as a tax partner with one of the large international CPA firms, on my comments herein. If the DFC owner has a ruling from IRS or an opinion from a nationally respected CPA firm that supports a different position, I'll be pleased to discuss it with him and eat crow here if appropriate.

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

For the 3rd time I will state that DFC does NOT tell people how much to claim. That is between them, the appraiser and their independent tax advisor. How many times do I have to repeat that statement?

In my earlier post I stated that "IRS Publication 526 clearly outlines the right to take a tax deduction for a charitable donation of real property. It also clearly states that you may deduct the fair market value (“FMV”) of that property." Have you read that Publication??? That is precisely what it states. On page 20 of that Publication it states that appraisal are recommended for deductions exceeding $5,000...for your information. If you want to know how appraisals should be done see Publication 561.

Let me ask you this...what if you had to sell your house without showing it to anyone. You were only allow to post pictures of it on the web and it sold for $100,000. But your neighbors house (exactly the same) sold for $200,000 after being shown by a professional Realtor. Would you claim the FMV was $100,000 or $200,000?

 

[Timeshare Von]

DFC . . . as someone who completed the "online" form for info and having had a follow-up call from one of your associates, I will tell you that I was advised to not worry about the $1,800 up front fee as I would be able to take a tax deduction to more than offset that expense.

I knew better, regardless of "how" she may have thought that would occur.

Also, folks here are generally skeptical when it comes to anyone wanting money to help with a timeshare tranfers (either by donation or sale).

Lastly, I believe your organization has been fairly portrayed based on the experiences reported by our members. I personally have responded to at least two people privately off-list as well as posting info on my thread regarding donating.

Like Denise, I ponder your IRS form 990 and how much overhead expense vs. charitable good your organization is doing (or at least reporting) . . . and have to say it appears to be a bit off kilter to me too.

Coming in here and blasting away isn't doing much good for "your cause" and will only serve to alienate folks from even considering DFAC as a viable option.

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

Here is the memo you requested regarding writing off fees from a National Washington DC Firm that I paid $4,500 for...not to be a wise guy but I hope you like crow! But in all seriousness, we all know that the tax code is complicated and that different accountants will take different approaches. Some say this is aggressive and other would say its reasonable. But this is the professional opinion you asked for. ENJOY, $4,500 of free tax advice paid for by my organization.

This responds to your question concerning the deductibility of payments for deed preparation and recording costs in regard to donations of timeshare interests.

IRC section 170 (c) permits charitable contribution deductions for gifts to or for the use of charitable organizations.

Unreimbursed expenses paid on behalf of a charity usually are deductible only when associated with the provision of volunteer services for a charity. See, e.g., Treas. Reg. section 1.170A-1(g) which states that while no charitable deduction is available for a contribution of services, unreimbursed expenses incurred incident “to the rendition of services to an organization…may constitute a deductible contribution.”
Such deductible expenses include unreimbursed “out-of-pocket transportation expenses…incurred in performing donated services…”

The Internal Revenue Code and the regulations are silent in regard to deducting expenses incurred in making a charitable contribution. We found one case, however, Archbold v. U.S., 444 F.2d 1120 (Ct. Cl. 1971), which addresses this issue.

In Archbold, donor donated land to the National Park Service for use as a park. Following the contribution, the District of Columbia sought to construct a road through the park. When the National Park Service failed to oppose the District of Columbia’s proposal, the donor filed suit to enjoin construction of the road. The donor deducted as a charitable contribution the legal fees she claimed were paid on behalf of the National Park Service to oppose construction of the road.

The Court ruled that no personal benefit inured to the donor in connection with her payment of legal fees to oppose construction of the road. “The real question…is whether in this case there has been a contribution or gift ‘for the use’ of the United States. (The donor did not argue that the payment of the legal fees was a contribution “to” the United States.)

The court referred to Treas. Reg. section 1.170A-1(g), discussed above, and noted that “[a]ll that the regulations apparently require is that the [deduction for an unreimbursed] expenditure be ‘incident’ to the rendition of services to a qualified donee…It should perhaps be noted that there is no comparable regulation respecting expenditures made incident to the donation of a deductible gift. However, we do not take this omission to mean that the Commissioner would disallow a deduction for such expenditures. Rather, if a deduction is allowed for expenses incident to the performance of nondeductible services, it would seem to allow, a fortiori, that incidental expenditures in the making of a deductible gift would be deductible…Nor do we think that the fact that incidental expenditures directly attributable to, and caused by, a charitable donation [that occur] some time after the donation necessarily disqualifies them under section 170. We can conceive of no valid reason, especially considering the policy underpinnings of section 170, for imposing a time limit on the deductibility of out-of-pocket expenses incurred incident to a charitable donation.” Id.

The court ruled that the donor’s payment of legal fees to oppose construction of the road on behalf of the Park Service was incidental to the contribution of the land. Therefore, the donor was entitled to a charitable contribution deduction for the payment of such expenses.

See, also, Letter Ruling 7922060 (February 28, 1979) in which the IRS ruled that unreimbursed out-of-pocket expenses incurred by a donor in sponsoring cocktail parties and dinners to promote a ball held by a charity to raise funds were contributions “for the use” of the organization and, therefore, deductible as charitable contributions under IRC section 170.

The payment of deed preparation and recording costs associated with the donation of timeshare interests and other expenses incident to the donation are costs paid on behalf of the charity. If the donor did not pay these costs, the charity would have to pay these expenses.
Therefore, the payment of such costs on behalf of the charity is, at a minimum, a donation “for the use” of the charity and should be deductible under IRC section 170.

This communication is protected by the attorney-client privilege, is rendered solely and exclusively to Project Philanthropy for its benefit, and strictly limited, as set forth herein. This communication may not be used for any other purposes whatsoever and may not be relied upon by any other person or entity except by Project Philanthropy and its successors and assigns. For this reason, we recommend that you suggest that donors wishing to deduct the payment of deed preparation costs and recording expenses associated with the contribution of timeshare interests seek independent legal advice from their attorneys and accountants. [End of memo]

 

[Timeshare Von]

This communication is protected by the attorney-client privilege, is rendered solely and exclusively to Project Philanthropy for its benefit, and strictly limited, as set forth herein. This communication may not be used for any other purposes whatsoever and may not be relied upon by any other person or entity except by Project Philanthropy and its successors and assigns. For this reason, we recommend that you suggest that donors wishing to deduct the payment of deed preparation costs and recording expenses associated with the contribution of timeshare interests seek independent legal advice from their attorneys and accountants. [End of memo]

NOT COOL . . . that you posted this protected legal advice!

 

[Timeshare Von]

Here is the memo you requested regarding writing off fees from a National Washington DC Firm that I paid $4,500 for...not to be a wise guy but I hope you like crow!

You're not being a wise guy . . . but if I were to use the words that come to mind, I'll have Brian and/or Denise after me for violating TOS here.

I really don't see that you're adding anything here and suggest the thread be closed at this point.

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

Timeshare Von,

I am very proud of my charity. To come on to this site to find a moderator say things as irresponsible as "Donate For A Cause itself is not a charity" is extremely troubling to say the least. I worked really hard over the past 6 years running this organization which is fueled solely by the donations of timeshares. Wouldn't you be a little upset to find people who didn't even do basic due diligence bashing your hard work?

In addition, the fact that my charity covers all of its overhead at 53% and thereby gives 47% of all gross income directly to charitable causes is awesome. Did you know that Habitat for Humanity (one of the most beloved charities in the US) spends 23% of its gross proceeds on marketing alone. That's 23% before any overhead is paid (rent, salaries, insurance, travel etc). My charity is more efficient than Habitat for the Humanities which is something to be proud of. By the way, the fact that Habitat for Humanities spends that much on marketing is not a bad thing. How can you criticize an organization that has built over 400,000 homes for the poor and needy. We have marketing cost also. We have to compete with fraudulent listing companies and over-charging Rescue companies. We try to get to sellers before they get ripped off. Its hard to compete with someone who charges more and doesn't perform as much or at all.

I apologize if I became upset by the accusations of "fraud," "bogus" and "not a real charity" but these are serious claims which are untrue. I only want to clarify and stand up for what we do and who we are. We are an honest charity doing good things with the funds we raise and I will continue to defend that truth.

 

[Timeshare Von]

What she said was that the tax deduction is bogus . . . and as you have also read, many other CPA types agree with her in that if the value of the property is zero, you have no value to deduct.

Further, she admitted to essentially misspeaking that DFAC is not a charity after I clarified the matter relative to their 501(c)3 status.

I can appreciate that you are proud of your work, as I have been with every 501(c)3 I've worked with. What most of us here do not appreciate is the business model your organization is working with where you expect donors to pay you up front for the administrative fees to handle our charitable contribution to your cause.

I was more than willing to support the cause, but not when it was going to cost me $1,800 on top of whatever "value" the timeshare may have. As it turns out, I was able to give my timeshare away for free to someone here on TUG. I'm really glad I didn't fall for the "pay us $1,800 to take that off your hands" approach and it didn't cost me a dime.

 

[LannyPC]

I can appreciate that you are proud of your work, as I have been with every 501(c)3 I've worked with. What most of us here do not appreciate is the business model your organization is working with where you expect donors to pay you up front for the administrative fees to handle our charitable contribution to your cause.

...and then tell people that the tax deduction will compensate for the upfront fees.

 

[Dave M]

DFC -

I'm still waiting for your law firm's (or CPA firm's) statement that it's okay to claim a grossly inflated amount for the fair market value of the timeshare. That's not likely to happen.

Further, the confidential memo, which I'm guessing the release here will infuriate the law firm if they find out about it, has a tenuous conclusion. What it doesn't address is that the timeshare owner would not be able to dispose of the timeshare without paying expenses - either to you or to some other "buyer". Thus, contrary to what the memo states, the timeshare owner does in this situation receive a "personal benefit" from paying the fee. Even if the memo were accurate, the fees quoted in this thread far exceed what timeshare owners would normally pay for "deed preparation and recording costs", thus making the excess not deductible, even if one relies on that memo.

 

[timeos2]

Overall DFC is doing well -in general it appears the good folks here on TUG have accepted the idea that his organization does accept timeshares as donations and they do as they promise to get the timeshare out of the owners name. Many so called PCC don't do that important step.

But it is equally clear that the idea that a donated timeshare somehow gets a value- via what does appear to be a bogus "appraisal" - far above what the true open market offers raises serious red flags. All readings of IRS rules appear to say that the open market sets the price while DFC argues a different basis. Using that second, very questionable method is where things fall apart. It just doesn't appear to be legitimate and anyone going that route is taking a serious risk of IRS backlash IMO.

So overall DFC is a high cost way to pass your timeshare to a new owner. I would not put high on my list of desirable methods of "selling".

 

[DFC Answers]

Founder/Attorney For Donate For A Cause

Dave M,

You are a little hard to please when you ask me to produce a memo to back my position and when i do you criticize me for producing it. I have every right to produce it since i bought it. The disclaimer is to protect me. I'm the client. I paid for the memo which i can use "for Project Philanthropy's benefit."

You can't make a determination that not all of the fees can be written off unless you analyze what those fees pay on behalf of the charity. If it is a property the charity will resell it goes to cover both closings, appraisal, recording fees and marketing. If it is going into the rental program it covers one closing and a year's maintenance fees. All of these fees would have been paid by the charity but for the donor donating the fees to cover these expenses.

I'll finish my end of this conversation with the reminder that DFC (Project Philanthropy) does NOT dictate the FMV to be claimed as the deduction. That is decided by a 3rd party appraiser and then will be used at the discretion of the donor upon counsel with their tax advisor. I can't understand how moderators can continue to cry "bogus" when they haven't reviewed an appraisal nor taken into account that it is then up to the tax payer's discretion to use the determination of the 3rd party licensed appraiser. After donating with us the taxpayer is welcome to use whatever FMV they determine is accurate. Why are you criticizing DFC when this aspect of the process isn't even ours to decide or dictate? We assist the client in getting a independent 3rd party expert opinion and then tell them to get another professional opinion (tax advisor) in order to decide how to use that opinion when filing their taxes. What else can our charity do to please you? We are following proper prudent protocol.

 

[siesta]

I apologize if I became upset by the accusations of "fraud," "bogus" and "not a real charity" but these are serious claims which are untrue. I only want to clarify and stand up for what we do and who we are. We are an honest charity doing good things with the funds we raise and I will continue to defend that truth.

The causes the proceeds benefit are noble ones indeed.

 

[DeniseM]

I'll finish my end of this conversation with the reminder that DFC (Project Philanthropy) does NOT dictate the FMV to be claimed as the deduction. That is decided by a 3rd party appraiser and then will be used at the discretion of the donor upon counsel with their tax advisor. I can't understand how moderators can continue to cry "bogus" when they haven't reviewed an appraisal nor taken into account that it is then up to the tax payer's discretion to use the determination of the 3rd party licensed appraiser. After donating with us the taxpayer is welcome to use whatever FMV they determine is accurate.

This is laughable. If this is true, why do you even provide an appraisal?

I'll tell you why, because if you didn't, and your clients actually had to go out and get a truly independent appraisal for tax purposes, they would discover that their TS has no resale value and no deduction. AND they would discover that your company's promise of a big tax write off is not supportable.

So you provide an inflated appraisal because that's the big selling point for your services, knowing that 99% of your clients will simply accept it at face value and use it for their taxes.

But now, you are suggesting that clients shouldn't rely on your appraisal - and that they should do their own due diligence.

Double talk....

BTW - no one with any common sense would believe that your affiliated appraiser is an independent appraiser.... Obviously, they have a vested interest in keeping your business. Remember, your employee already told us that your appraisals average 80% of retail value. If these were truly independent appraisals - how could he even make a statement like that?