Randy Fox Interviews Kimm Dodaro

Randy Fox Interviews Kimm Dodaro

Article posted in Real Property on 15 December 2015| 1 comments
audience: National Publication, Two Hawks Consulting, LLC | last updated: 12 February 2016
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Summary

I interview Kimm Dodaro of the Walter Joseph Group, LLC on the gifting of real estate assets.

Click here to listen to the audio version of this interview.

Randy Fox:    Good afternoon.  This is Randy Fox and I am here today with Kimm Dodaro of the Walter Joseph Group.  And the Walter Joseph Group is a very unique company that helps charities accept gifts of real estate.  Kimm, welcome, thanks for being here.

Kimm Dodaro:    Thank you, Randy.  I appreciate being here as well.

Randy Fox:    Can you tell me a little bit about how Walter Joseph Group got started and kind of what they are doing right now?

Kimm Dodaro:    Sure.  Walter Joseph Group actually started as a real estate consulting firm doing actual land development consulting for high net worth clients.  And over the years it actually developed into being asked to help some non-profits set up gifts of real estate departments with inside their organizations.  And so over the years we’ve realized that gifts of real estate are so important to the charities to consider that we’ve decided to make Walter Joseph Group one of the leading companies in the educational arena for accepting gifts of real estate.

Randy Fox:    And so tell me a little bit about how you go about interfacing with charities and donors and what they means for the charities.

Kimm Dodaro:    Well, I think the first the first step is really the educational process and just creating an educational awareness to the charities, to the board, to the staff on the value of real estate gifting.  That’s the biggest hurdle because I think of many charities over 80% of them are turning away or denying gifts of real estate.  And when you consider that in perspective to the fact that to an average client or donor, if you take a look at their net worth of their portfolio of assets, 30-45% of what they own is in real estate.  And so to turn away a gift, or a potential of a gift that could be substantially larger than some of the gifts they are currently receiving, is really doing a disjustice to the organization.  So it’s getting over that educational hurdle is the first spot.  Once we do that and we get them excited and motivated and see the value in working with gifts of real estate, then its educating that charity on how do we do it, what does it look like for us?  What is our level of risk that we’re willing to take in order to accept gifts?  What are our options in the different types of gifts we may look at?  Who do we need on our bus, right, to provide us with additional consulting or resources to make sure that we’re not taking on more than we can handle, we can manage our level of risks for it.  So often we hear that real estate is such a complex asset, and I think it scares a lot of people away.  In years past we have heard of some charities taking on some properties that maybe were contaminated or had some issues that ended up causing some hardships to those charity’s bottom line financially and that can be true if the right due diligence isn’t done up front.  But if you have the right team on the bus, and if you really have a true passion for wanting to accept gifts of real estate inside a charity, then there are methods and ways to do it that will benefit the charity with minimal to no risks at all.

Randy Fox:    Yeah, I’ve heard the same statistic and it’s really frightening and if you just take the overall net worth of the United States, only 10% or 15% of it is in cash or marketable securities.  So it always seems to me like charities are going after the smallest pocket of assets they can get and missing out on huge opportunities.

Kimm Dodaro:    Well, donor research has some really good statistics out there right now and they say that donors that own $1 million to $2 million in real estate actually make up about 13.2% of the total donations that are given, which are four times more likely, those donors are four times more likely to give philanthropically than the average person.  And that increases as their real estate assets increase.  So those donors that own $2 million or more in real estate actually make up 25% of the monetary donations charities are receiving, which is 17 times more likely to give philanthropically than the average person.  So I think for any other reason than not, charities really need to really analyze their donor pool and look at their real estate positioning because that’s going to help leverage them to know who is a potential strong giver to their charities.  And so there is more than one reason to really get involved in real estate gifting from a charity’s perspective.

Randy Fox:    Well if you turn the tables a little bit, if a charity holds itself out as we accept gifts of real estate, they may attract donors who have been turned away at other doors.

Kimm Dodaro:    That’s so true and actually that’s what we see a lot.  We get a lot of calls from attorneys, financial advisors, CPAs that have questions from their clients that have tried to either make a gift to their charity of choice and the charity has rejected that gift, or they are working with their advisor to try to determine how to structure a gift and what considerations may be.  And so those advisors are reaching out to us as well for some consulting and advice and so we really become at Walter Joseph Group we become like the glue for the transaction.  We look at it from the donor’s perspective, we look at it also from the charity’s perspective, and we’re even able to help from the advisor’s perspective because the advisor has a fiduciary right to provide the best service and support to that client.  And so it really becomes important to, if you are a charity, to really take a front role in getting your arms wrapped around real estate gifting because when that donor comes to your door you have one chance to answer it.  And if you don’t, then most likely that donor is going to go elsewhere.  I had a—I was flying a couple of years ago and I happened to sit next to someone on a plane who was an executive director of a very large university in Chicago and this director on the flight we introduced ourselves and shared with me that three weeks prior to our flight together they received a call from a donor who wanted to make a gift of a farm and a luxury airplane, and because the university wasn’t equipped to handle either one of those types of gifts they kindly rejected them from their donor.  And so I basically couldn’t sit on the plane anymore.  I was so bouncy in my seat.  I couldn’t wait to get off and I said to this person, please, when we land and we get to baggage claim, make a quick call to your donor and see if that gift has already been made because if not let’s get together with that donor and see what we can do to rescue that gift.  That could have some potential value to your organization.  And the executive director did reach out to the donor but unfortunately the donor had already found another source within two weeks, two to three weeks of the transaction.  So, donors will move quickly if we don’t capitalize on the opportunities, Randy.

Randy Fox:    Right.  And being rejected by a charity you care about has got to not feel good from the donor’s perspective.  Those kinds of rejections will likely cost the charity not only the current gift but any future gifts.

Kimm Dodaro:    I couldn’t agree more.  I couldn’t agree more.  And the average gift in real estate right now is valued at around $283,000.  So for a charity to bring in one, two, three maybe five, if they are a larger organization 10, 15, 20 real estate gifts in a year.  I mean, and that’s without trying.  Do the math.  It can be a powerful fundraiser. 

Randy Fox:    That’s a lot of silent auctions.

Kimm Dodaro:    That’s a lot of galas. 

Randy Fox:    A lot of galas.  Any type of real estate that you seek out or specialize in, or is it whatever kind of crosses the threshold?

Kimm Dodaro:    You know, really you can look at any type of gift of real estate.  When you are thinking about it from the charity’s perspective there are two different ways of looking at it.  The first perspective is, do we need it for our use.  And if there is a farm in the area that you are looking to acquire because you are going to do an extensive build out, or whatever the reason might be.  I work with some veteran organizations.  We work with some veteran organizations and help them to acquire housing for veterans.  And so if they receive a gift of a home they are most likely going to retain it in their portfolio.  Those are wonderful gifts because they are actually used on a daily basis for the mission of that organization.  But if that veteran organization happens to get a knock on the door for a commercial building donation and they definitely can consider that gift and should definitely consider that gift, to accept it based on doing the right due diligence and review and then liquidate the gift or move the gift onto another charity that may be of use to it and take the liquid proceeds for their mission.  So there really is no type of property that is good, bad or different than another.  Some say avoid gas stations, they are contaminated.  Or, if it doesn’t pass a Phase I environmental review definitely walk away from it.  Or if there is any debt on the property don’t consider it.  Those are all fallacies.  And it’s just like I always say, it’s like open heart surgery.  The majority of people in the world would say open heart surgery is a very difficult and complex surgery to perform, but if you ask the best surgeons of the world that are the best open heart surgeons they tell you it’s easy, they do it every day three times a day.  So I would say to the charities, if you are dealing with a true gift acceptance program in your organization and you don’t know how to handle all types of real estate, you need to bring on the right team to help you do that.  And when you do do that, then you will be able to be prepared and handle any gifts like the commercial building, or another asset that may come your way that doesn’t fit your mission or your use but can definitely bring you strong liquidity by taking on the right transaction.  And don’t get me wrong, Randy, there are some properties that should be avoided based on proper due diligence and review.  And it could be a residential home that you walk away from for many reasons.  It could be any property that you walk away from for any reason.  So it really is an independent review of each independent gift for independent reasons at that point, would be my best advice to the charities.

Randy Fox:    And you have the capacity to do this anywhere in the United States, is that right Kimm?

Kimm Dodaro:    Yeah, Walter Joseph Group is a real estate consulting firm specializing in A to Z all of the necessary steps and really being the virtual back office for charities across the country in accepting gifts of real estate.  So even if the board or even if the organization decides that they don’t want to take on real estate in any capacity or take title to it or ownership in any capacity, still bringing us onboard for an evaluation and having us be part of their team where if a gift does come to their door, they can use some of our other resources that we have within our organization to get the gift liquefied and still bring that charity liquid value without ever taking any risk or being on any title to that property.  And that’s where that large university that I sat on the airplane with, that at a minimum is what that organization should have done.  If they would have known about Walter Joseph Group three weeks earlier we probably would have brought them over a million dollars in a liquid check within about 60 days of that transaction.

Randy Fox:    Kimm, do you have anything else to add?  This all sounds like an extraordinary opportunity for not only charities, but for the advisor community as well.

Kimm Dodaro:    Definitely.  And advisors have a responsibility to their clients to really understand their asset portfolio and real estate is an asset class that doesn’t get looked at very thoroughly. And we have an educational workshop at Walter Joseph Group for advisors, as well as for charities.  It’s a one day workshop.  You can definitely reach out to us and we’ll be happy to get you connected to one of those sources.  I would say don’t be afraid of real estate.  It truly is not a complex asset when you have the right team in place.  It’s a very valuable asset to charities and it’s a very important asset to advisors to consider in bringing the best foot forward for their clients or for their potential donors.  And Randy, you said it great earlier. It is so important to be able to capitalize and help and serve our clients and our donors, because if we don’t at the onset then somebody else is waiting behind us to do so and we just can’t afford that these days.

Randy Fox:    Well, thanks Kimm.

Kimm Dodaro:    You’re welcome, Randy.  Thank you so much for your time.
 

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Re: Randy Fox Interviews Kimm Dodaro

Fascinating interview, especially the story about the airplane ride to Chicago!

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