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

[DFC Answers]

Founder/Attorney For Donate For A Cause

Denise,

Why do you assume every timeshare on the planet has $0 cash value? We sold two timeshares last week for over $10,000 each. Your entire premise is that every timeshare donated to us is a piece of junk not worth a penny. Just because you own cheap timeshares doesn't mean everyone's timeshare is worthless. Are you telling me that the timeshares we sold for over $10,000 have a FMV of $0?

 

[DeniseM]

I didn't say that every timeshare donated to you is a piece of junk, but I bet the vast majority have no resale value - despite that, you are providing appraisals that averages 80% of retail - per your employee.

That is simply indefensible...

BTW - Your little digs about my "cheap timeshares" and other such comments will not endear you to Tuggers..

 

[DFC Answers]

Founder/Attorney For Donate For A Cause

If someone gave you a timeshare that you could only sell for $50 but if you rented it out each year and made $200 every year what would be the fair market value of that gift? $50? or more? I would argue more? Our plan is not to sell these timeshares for $50 but rather to raise $1000's of dollars off of each one. Most of these timeshares are really nice places. It is incredibly convenient for a family to go on vacation, as you know, with a small kitchen and laundry facilities.

Timeshare are only worthless if you are desperate to sell them. If you have the resources to market them properly how can a nice condo be worth nothing? Let's assume that our charity is in the position to market these properties better than the average person. Without disclosing our method and begging competition...assume that we are able to make more money off of these timeshares than the average owner who isn't an expert in the timeshare industry? Shouldn't our donors get the FMV that more closely represents our return?

If this wasn't true than where did the $3.5 million come from that we raised for charity?

 

[Dave M]

If this wasn't true than where did the $3.5 million come from that we raised for charity?

Since you founded DFC? Perhaps. But only $127,464 in one year, according to your filing with IRS. (See post #16 in this thread.) That's a very small number.

 

[Karen G]

Shouldn't our donors get the FMV that more closely represents our return?

Why couldn't you just tell the donor what his/her unit sold for and then that would be the fair market value that could be deducted? And they wouldn't have to pay for an "appraisal."

 

[DFC Answers]

Founder/Attorney For Donate For A Cause

Our goal is to keep them all and rent them. We deed all of them into our charity within 12 weeks. If they rent successfully we keep renting them year after year. If we have trouble renting them we try to sell them quick hoping to get someone who can use it and therefore pay the maintenance fees. But this could take a year. Remember with the fee they pay us we have a year cushion to test the rental market. The problem for the donor is that they can't wait until we decide if we will keep it or sell it before they have to file their taxes. They need an evaluation before a year away. They typically need it within a couple of months.

This whole issue gets more complicated when you start factoring in the affect on FMV when we do this. Should the donor be punished, or better yet, is it a fair value if we try to rent it for a year and when we realize we can't we take whatever steps we can to dump it within a couple of weeks? Couldn't the donor argue that if we spent that marketing time, money and energy which we invested in testing the rental market, in trying to sell the property that we would have realized a higher sales price? If I ran an ad in a major newspaper and offered free airfare and lodging at the timeshare and then had a good salesperson meet them at the end of their vacation (like the developer did) I might have been able to get a much higher price then if I placed it on a website for a week.

Like I said before, if you weren't able to show your house but rather had to sell it on the web with only pictures and it sold for $100,000 but your neighbor invested a bunch of money in marketing, hired a professional sales person and thereby sold an identical house for $200,000 which is the FMV? Should the donor be punished because the charity is in a hurry or bad at marketing?

These are complicated questions and that is why we don't decide the FMV. That is why we leave it to experts. If someone doesn't want an appraisal we don't force them to get one. But then its up to them to figure it out. The appraiser creates a report and shows how they came up with their figure. You attach that to IRS Form 8283 and give it to the IRS. Out of the 5000 donations that we have handled over the last 6 years I have never had a donor come back to us and say the IRS is challenging their appraiser's FMV conclusion.

 

[arc918]

The IRS will get wise to overvalued appraisals the same way they did with the donation of cars a couple years ago.

The taxpayers would write off their car at high retail bluebook, then the charities would end up selling the car at auction.

There was huge chasm in the amount of $ being deducted vs. the income being reported on the 990s of the charities.

The IRS called BS and changed the rules. They are behind the times for sure, but they'll get on board with the true market value of timeshares.

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

I agree. That is why people should donate now before the tax code is changed.

Learned Hand, an American judge, once said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible as nobody owes any public duty to pay more than the law demands.

 

[arc918]

I agree. That is why people should donate now before the tax code is changed.

Learned Hand, an American judge, once said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible as nobody owes any public duty to pay more than the law demands.

it is the appraisers who are at risk here

how can they support these "historic retail" valuation when people are paying organizations like yours to get out from under their timeshares

people are literally paying other people to take their timeshares ($1 on ebay, seller pays closing and current year maint fees)

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

The appraisers are at risk if they don't use standard appraising practices. It is our goal to make thousands of dollars off of each timeshare donated to us. I just rented a timeshare at Flathead Lake Montana for $1,100. I couldn't give away the whole ownership. These are valuable assets when you turn them into rentals and when you can dissipate the marketing and labor costs over thousands of properties. We have 2,200 timeshares in our inventory. If you were renting just one timeshare the return may not be worth the effort (one special assessment would wipe out years of work) but when you are renting thousands it is worth the effort. If we are going to make $10,000 off of your donation then how would an appraisal equal to that be inflated?

 

[Timeshare Von]

I'm very confused now and feel like you're engaging in double speak Mr DFAC. If your desired goal and model is to keep the TS and generate revenue through rentals, why did your office staff stay that because of the economy it is more difficult to sell them and therefore, the person doing the donating has to pay an upfront fee to pay the buyer's closing costs? At $1,800 as quoted to me that is a heck of a lot more than just closing costs.

I'm sorry, the more you talk the sketchier things seem to me.

 

[Karen G]

We have 2,200 timeshares in our inventory.

How much do you pay in maintenance fees and special assessments on all those timeshares each year? Seems like that really cuts into the amount of money you can donate to charities.

 

[am1]

Seems like its the tax payers who are footing the bill for the "sellers" and DFC's profits.

If it can only sell for $50 it is worth $50. The money you are making off renting it has its own expenses and even so the present value of that money is worth a lot less now.

Everything would be a lot easier and safer if donations were not tax deductible. If people wanted to give money to a fringe charity that would be their choice.

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

I wouldn't call the American Cancer Society a "fringe" charity. If the charities are going to make thousands of dollars off of the timeshare why is it only worth $50? As I stated earlier, we use to sell more of the properties and rent some...now we are starting to rent more and sell some. It is our goal to rent them all. There is a cost to owning these, as you all know, but the Flathead Lake timeshare that I rented for $1,100 only had a MF of $550 so the charity made $450. That is a heck of a lot better than selling it for $50.

 

[Karen G]

There is a cost to owning these, as you all know, but the Flathead Lake timeshare that I rented for $1,100 only had a MF of $550 so the charity made $450.

And the "charity" is Donate For a Cause, right? Or are you claiming you gave the $450 to the American Cancer Society and kept $100 for yourself?

 

[DFC Answers]

Founder/Attorney for Donate for a Cause

All $550 went to charity. I got paid to transfer the property to the charity. I don't get paid after that. The net proceeds are equally split up between:
American Cancer Society
American Kidney Fund
Alzheimer's Association
Feed The Children
Jane Goodall Institute
National Autism Association
National Foundation for Cancer Research
National Parkinson Foundation
National Public Radio
National Wildlife Federation
United Cerebral Palsy
Project Philanthropy (its overhead was discussed earlier)
I am not employed by Project philanthropy...I do not get a paycheck from Project Philanthropy. My company only gets paid to initially transfer the property to Project Philanthropy. All the proceeds raised by the property goes 100% to charity.

 

[alanwendt]

DFC seems like one of the few guaranteed exit plans out there and is doing some good work besides. I'm not sure why the moderators are being so negative.

One reason that your TS is worth more to DFC than to you is that DFC doesn't have the RCI overhead, because it already has timeshares all over the place. If I didn't have to pay RCI $300/year to do exchanges, and I could still go anywhere I wanted, I'd probably keep the darn thing. Even though I'd still have endless uncontrollable maintenance charges.

 

[DeniseM]

Please note that this thread is 2 years old...

 

[Saintsfanfl]

DFC seems like one of the few guaranteed exit plans out there and is doing some good work besides. I'm not sure why the moderators are being so negative.

One reason that your TS is worth more to DFC than to you is that DFC doesn't have the RCI overhead, because it already has timeshares all over the place. If I didn't have to pay RCI $300/year to do exchanges, and I could still go anywhere I wanted, I'd probably keep the darn thing. Even though I'd still have endless uncontrollable maintenance charges.

Nice fantasy story about DFC having timeshares all over and not needing an exchange company. DFC has no desire to keep the "donated" timeshares. They sell, give, or pay people (free usage) in order to unload them. The timeshare being the donation is a lie. The real donation is the up front fee, although only a tiny portion of that, if any, actually goes to charity.

If you have something of real value you wouldn't have to pay a charity $1,700 to take it.

 

[Conan]

I have a couple of timeshare weeks that I'd gladly be rid of. Clearly their market value is essentially zero.

I wouldn't have any moral qualm about deeding them to an individual or charity that would take them for free or at a small cost to me. For the IRS side of the question, I wouldn't take a charitable deduction even if someone told me I could.

Besides trying to give them away via TUG or Ebay, are there companies out there that don't charge as much as Donate for a Cause?

 

[Rent_Share]

http://www.clarkhoward.com/categories/scams-ripoffs/timeshares/

DFC no longer recommended

 

[LannyPC]

Besides trying to give them away via TUG or Ebay, are there companies out there that don't charge as much as Donate for a Cause?

Yes there are but beware. Most of these operations run the "Viking Ship" scheme (that can be explained later if need be).

Many resorts are countering these "Viking Ship" schemes which could lead to troubles for the donor and possibly even the scheming operation.

 

[theo]

Couldn't access the reference...

http://www.clarkhoward.com/categories/scams-ripoffs/timeshares/

DFC no longer recommended

Following the link provided, I found the "intro" to the subject article but could only access the first 4 lines and (most of) the first 2 sentences. I don't know if this a computer (or computer user ) issue at my end or what, but can you summarize the gist of Clark Howard no longer recommeding DFAC, reportedly after having viewed DFAC more positively for the preceding 8 years?

 

[Saintsfanfl]

Following the link provided, I found the "intro" to the subject article but could only access the first 4 lines and (most of) the first 2 sentences. I don't know if this a computer (or computer user ) issue at my end or what, but can you summarize the gist of Clark Howard no longer recommeding DFAC, reportedly after having viewed DFAC more positively for the preceding 8 years?

I don't even see a single word beyong the caption. It's old news though. It was 2.5 years ago so he has not recommended them for quite some time. The age might be why the actual article is gone.

 

[Saintsfanfl]

It looks like Ric Romero needs a basic lesson in charitable contributions.

http://abclocal.go.com/kabc/story?section=news/consumer&id=8882894

Donors are able to write off the appraised fair market value of the timeshare on their taxes, not the amount the property sells for, which could be a lot less.

If your timeshare has little monetary value, you may have to "pay" the charity to take it off your hands. That's because a charity doesn't want to be on the hook for the maintenance fees.

The IRS does not agree Ric:

IRS Fair market value. Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

Also, if the "deduction" is greater than $5k, it must be supported by a qualified appraisal.

This article offers fraudulent tax advice and looks like a DFC plug.