Wednesday, October 5, 2011

Donating Your Whole House: Is it Too Good to be True?

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Posted by Nicole Tai, N. California Development Director for DRN:

Lately, we've been encountering property owners who are not doing all their homework when it comes to their selection of appraisers and deconstruction contractors. Many think our organization adds an extra layer into the mix, but in fact we are providing you a GUARANTEED donation. Only a few other organizations can say that in California. I love making deconstruction happen, but our industry needs to maintain certain standards to remain effective and true to the goals of reuse. In this blog post, I outline the differences between non-profit and for-profit contractors and appraisers. As you read on, keep in mind the old saying, "If it is too good to be true, it usually is" because it is perfectly applicable to this industry.

The 2004 Non-profit Integrity Act requires for-profits to register as fundraisers for non-profits, and this means that if a company is offering a tax deduction for deconstruction, it needs to have a written agreement with a non-profit. Unfortunately, most of the outfits in the San Francisco Bay Area are not in compliance with this act and are not registered. They are operating independent of the non-profits they are soliciting donations for, many of which aren't even aware of these "deconstruction contractors" and appraisers. These companies may not see it as a fraudulent act, but in reality they are no different from used car dealers who "solicit" car donations from unsuspecting donors.

At Deconstruction & ReUse Network (DRN), we may seem "picky" because we are maximizing reuse potential through local and legitimate markets. We work with both for-profit and non-profit reuse groups to ensure that materials are either reused in projects, or resold to the general public -both of which keep valuable items out of the landfill. We make sure that materials are removed well to insure that they actually will and can be reused.

We aren't going to tell you we can reuse that 1960's furnace when in reality it will be recycled for the copper and metals. It is important to note that recycling does not constitute a donation. Why not? Without getting into boring details, recycled materials only yield a fraction of the value when compared to reusable items. In the deconstruction industry, contractors will generally calculate the value of recyclable metals to help offset their cost to the client and this number is NOT factored into the donation.

If you are planning a home demolition and are approached by a for-profit Deconstruction Contractor or Appraiser for a house donation, we encourage you to do your due diligence by asking the following questions:
  • Does the non-profit your materials will be donated to actually exist?
  •  Is the non-profit’s mission relevant to reusing building materials?
  • Ask to see a copy of the agreement with the non-profit, or their filing with the state attorney general as a fundraiser.
  • Will someone from the non-profit be on site (required) to conduct the inventory, as well as provide you with both a copy of that inventory and documentation of the process?

Failure to acknowledge these important issues may result in you forfeiting the fair market value of your donation to resale value. The worst-case scenario is an IRS audit FOR YOU.

Alternatively, you can choose to go with tried and true, reputable organizations like us - Deconstruction and Reuse Network. If you have more questions on this topic, feel free to comment below or email me, and I would be more than happy to answer them.

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