Are fees charged by easement-holding organizations? What is a stewardship fee? Are there other costs to the donor?
Updated 2/21/2008Most easement-holding organizations request – or may require – that easement donors provide a cash donation together with the easement, sometimes called a stewardship fee or endowment contribution. This monetary payment helps to assure that the easement-holding organization will have resources to enforce the restrictions of the easement, as required by the IRS for easements qualifying for the tax deduction. Whether described as a fee or contribution, this cash payment is considered by most easement-holding organizations to be an integral part of the easement donation. Donors wishing to deduct the amount of this monetary payment accompanying the easement donation are advised to check with their own tax advisors to determine whether the cash payment is deductible as a charitable contribution.
Organizations use different methods to calculate the amount needed to cover their stewardship responsibilities. Some organizations charge a flat amount, some use a percentage of the easement’s appraised value, some use a percentage of the property value prior to the easement donation, some use a sliding scale with a cap, and still others estimate annual expenses and then capitalize that amount as an endowment that can be drawn upon annually to cover stewardship costs.
There are likely to be additional costs to the donor beyond the endowment contribution or stewardship fee paid to the easement-holding organization, such as fees paid to lawyers, appraisers, and banks (for executing subordination agreements required to meet the requirements for the federal tax incentive), and for consultants. Some of these additional costs may be considered “miscellaneous itemized deductions,” which are deductible to the extent that they exceed two percent of a taxpayer’s adjusted gross income. Again, donors are advised to check with their own tax advisors. As stated earlier, donors and preservation organizations are strongly encouraged to consult with qualified legal counsel and tax advisors if they are contemplating donating or accepting preservation easements.
