It’s not unusual for Mike House to pick up the The San Diego Union-Tribune, read an article about a local need, and call The San Diego Foundation.
Since opening his donor-advised fund at The Foundation in 2005, Mike has followed this tried-and-true method time and again, chatting with The Foundation’s Giving Team to learn more about local nonprofits mentioned in the news before deciding to make a grant.
“If you see something on the news or read a story about somebody that could use help, that has always interested me,” Mike said. “These nonprofits are people trying to help others who really need it. There’s a lot more need than there are resources.”
It’s the main reason why Mike’s generosity is so wide-ranging. In the last two years alone, Mike and his family have granted to more than 50 nonprofit organizations supporting a variety of causes in health and human services, animal welfare, education, the environment, youth development and more.
“If you can afford it, you ought to help,” he shared.
Building for Philanthropy
Mike remembers his early life when he didn’t have the means to give.
His mother pushed him to leave behind the streets of South Los Angeles and join the U.S. Army at age 16. She even signed his contract stating Mike was 17 at the time so he could enlist – “The only lie she ever told,” Mike recalled.
Discharged after three years, Mike settled in Louisiana where he started his family before moving back to Southern California, where Mike blossomed in his new career as a carpenter and climbed the ranks to a millwork foreman over the course of a decade.
After years of accumulating wealth from company stock, Mike was ready to start his own business. He signed a non-compete agreement in Los Angeles and Orange County, which led the House family to relocate to El Cajon in 1969 where Mike started his own contracting business.
The House family became ingrained in the San Diego community and developed a passion for horses on their 1-acre property, eventually building their own barn and horse corrals.
For several decades, Mike made a living buying land, contracting, and building commercial industrial buildings to rent and sell across San Diego County in neighborhoods such as Otay Mesa and Kearny Mesa.
It was after his eight children were grown and started families of their own that Mike sold his first Otay Mesa property in 2005 and, with his accountant, approached The San Diego Foundation with philanthropy on his mind.
“I liked the way The Foundation could manage my charitable money,” Mike said. “You have the resources to help research nonprofits, and you’re so organized.”
Gift of Real Estate
After years of grantmaking, in 2020 Mike was ready to replenish his donor-advised fund by selling one of his Kearny Mesa real estate properties valued at $5.35 million.
But this time, he wanted to maximize his gift by donating the property directly to his charitable fund in order to take advantage of significant benefits, including:
- Avoiding capital gains tax on the sale of his property
- Receiving a charitable income tax deduction based on fair market value
- Making a greater philanthropic impact
- Leaving a legacy of giving for his grandchildren
“If I had sold the property first then made the donation, there would have been a big taxable gain,” Mike said. “I’d rather give that money to those in need.”
Although real estate represents the largest asset class in the U.S., only 3 percent of total charitable giving comes from such gifts. It is often overlooked as a charitable giving asset due to its size, sophistication and complexity, which is why Mike turned to a team of experts to take on the challenge.
Mike started the conversation with his accountant, who quickly turned to The San Diego Foundation Giving Team to help execute the gift. Before long, the team recruited an attorney who specialized in gift taxes to work through the property’s complex ownership structure, and another attorney who specialized in estate planning.
“The San Diego Foundation was such a valuable resource for Mike and me, especially when we were working through complex issues related to his property,” said Andrew Pharies, estate planning attorney and partner at DLA Piper law firm.
“With The Foundation’s team approach to including Mike’s professional advisors, we felt assured the gift was structured for the most impact for Mike’s family and for charity,” he continued.
The Foundation Giving Team produced several illustrations and coordinated with all parties to find the best solution for Mike’s charitable needs.
In less than three months, the deed transferring ownership of the property to the Charitable Real Estate Foundation (CREF) at The San Diego Foundation was completed.
The donation resulted in a blended gift for Mike – one gift dedicated for current giving through the House family’s donor-advised fund, and another for a charitable remainder trust to maximize his tax benefits over time and so Mike’s grandchildren could carry on his legacy of giving.
“I felt comfortable and secure because these experts were really looking out for me,” Mike said. “I was getting the best advice and was able to lean on the team to maximize my gift.”
Since donating the property, Mike has dedicated more time to getting his family involved in philanthropy in hopes that future generations will continue the House family legacy of giving.
“I’m not going to be around forever,” he said. “I’d like family who are interested and have time to keep it going. I’ve started with three of my grandsons.”
Continuing to rely on The San Diego Foundation’s nonprofit expertise and community knowledge, Mike’s grandsons Efrem, Matt and Patrick have expanded the House family’s philanthropy to reach new areas, including suicide prevention, food security and Alzheimer’s research.
“These are areas we had never considered before,” the grandfather explained. “Their research will continue to go a long way.”
Donating Non-Cash Assets
Philanthropists can contribute both cash and non-cash assets – including stock, mutual funds, real estate and more – to donor-advised funds to maximize tax benefits and charitable impact.
Since 1975, The San Diego Foundation has helped passionate, socially minded citizens find ways to create positive impacts in communities across San Diego.
If you or your client are interested in learning more about the benefits of gifting a complex, non-cash asset like real estate to establish a donor-advised fund, contact our Director, Gift Planning Advisor Leslie S. Klein, CFP®, AEP® at email@example.com or (619) 814-1353.