WS1980 From Real Estate to Giving | Highlights Eric Most

Looking to leverage your real estate holdings and other assets for a greater good? This episode of the Real Estate Syndication Show dives deep into impactful charitable giving strategies with Eric Most from the National Christian Foundation (NCF).

Here are 3 key takeaways to maximize your charitable contributions:

1. Don't Just Donate Cash, Leverage Assets: Eric reveals a powerful truth: most of our wealth (around 90%) sits in assets, not cash. NCF specializes in helping you convert appreciated assets like stocks into impactful charitable donations. This allows you to deduct the full value without capital gains taxes, maximizing your giving power compared to using post-tax cash.
2. Real Estate for Charitable Giving: Real estate can be a strategic tool for philanthropy. Eric explains how donating a portion of a property to NCF before a sale can lead to significant tax benefits while supporting your chosen causes. NCF can manage these assets, using the generated income for charitable purposes.
3. Creative and Personalized Giving:  Eric's inspiring story showcases the power of creative giving.  He used NCF for his wedding registry, directing well wishes towards missions instead of receiving traditional gifts.  He also shares valuable insights on avoiding common mistakes in charitable giving, especially after selling a business or real estate.

Remember, it's not just about financial gain, it's about making a difference.  Listen to the full episodes below to learn more about impactful giving strategies.

https://lifebridgecapital.com/2024/02/01/how-can-i-make-a-bigger-impact-eric-most/

https://lifebridgecapital.com/2024/02/01/how-to-be-faithful-steward/

Ready to invest in real estate and make a positive impact? Visit lifebridgecapital.com to explore investment opportunities and start your journey toward financial success with a philanthropic purpose.

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Transcript

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Today, we've packed a number of shows together to give you some highlights. I know you're gonna enjoy the show. Thank you for being with us today. Eric, I'm honored to have you on the show. I've enjoyed getting to know you and what you all do at NCF. I'm excited to let the listeners, our investors know about this as well. I think it can be a major value to them and their family. And many other things that they care about as well. As I'm looking forward to diving into the conversation today, I think it's so neat that you and I have a few things in common around being adoptive families and just grateful for your family, you know, and the growth, you know, how you all done it through adoption, how the Lord's blessed your family and ours through adoption. So grateful for that and the uniqueness of the family property in Roanoke. I think that's so neat. Uh, you know, us living here in Roanoke and, and, uh, but now you all are in, uh, Colorado. So, uh, well, Eric, you know, again, grateful for your time. I know the listeners are going to learn a lot from you today and through a number of things that we're going to discuss. Welcome.

Eric Most: Well, thank you so much. I'm so glad to be here. It really is a joy.

Whitney Sewell: You know, Eric, why don't we get started and tell the listeners a little bit about NCF, the National Christian Foundation. And we're going to dive into a number of things in detail, but what is that at a high level? And then a little bit about yourself as well.

Eric Most: Sure. Yeah, so the National Christian Foundation, we're the largest Christian donor advised fund platform there is. And when I use that term, think about this as a charitable checking account. And so you get the taxable benefits when you make contributions into that checking account, and then you're able to give to other organizations. A lot of people think about NCF also as like a, like a, a smaller, much easier private foundation, uh, that they do their charitable giving with. And so national Christian foundation, um, began about 43 years ago now. And, um, by three gentlemen, uh, to that, that many listeners, um, might recognize their names, Larry Burkett, Ron blue, and the third gentleman, Terry Parker and the whole, um, uh, desire and hope of NCF was to help mobilize resources for the sake of the gospel and getting nonprofits funded in a tax efficient way. And so our founders actually worked with the IRS over 40 years ago to come up with a code that allows for donor advised funds today. And so NCF, we're the largest one of these. There are others out there that people might've heard of, you know, Fidelity and Schwab and things like that. But NCF has a Christian distinctive in the work that we do. And we do it because we long to mobilize resources, get funds deployed for the sake of the gospel. Over the years, we've actually had our givers have given over $20 billion to over 90,000 different nonprofits. Last year alone, we had givers give into NCF over $3.1 billion, and that is made up of cash and complex assets. We actually did over a billion dollars worth of business and real estate asset gifts last year alone. So we give, givers gave into NCF a little over $3.1 billion and granted out over $2.1 billion to over 34,000 different nonprofits. And, and that number you're like wow that's, you know, that's, that's awesome and there's there's a gap but there's a kind of a back gap there. Well, much of that actually came in in the last like six weeks of the year. And so, folks will distribute those funds over the course of the next year and next couple years. givers gave into NCF a little over $2.2 billion. And so in 22, they gave $2.2, and in 23, they gave out $2.1 billion. And that's just something that we love to see. And so I got here. I didn't grow up thinking I wanted to be in this role, though, by any means whatsoever. So I was part of a small-to-large or large-to-small insurance agency in Tampa, Florida that my father had started. And my wife and I, before we actually got married, we were in the process of gift registry and I was really demoralized by that process. We went to Crate and Barrel one night and I got a little scanner to go around and shoot, you know, all the stuff that you want. And we walked in excited and I walked out just feeling just feeling demoralized, as I said. And I said to Jackie, I said, Hey, we don't need any of this stuff. Let's just get rid of it all. And so we deleted the registry. The next day, Jackie went and went to Macy's without me. And she picked out a bunch of stuff and she's like, Hey, I want you to comment. If there's anything you don't like, you could get rid of it. So we're going through and she's showing me this stuff and bless her heart. She, we, I, We got married a little bit older in life too. And so we came with a lot of stuff. So she already owned a townhouse and she had two crockpots. And I happen to own two crockpots. And she picked out this three burner crockpot and I'm like, no, we don't need seven crockpots. Let's get rid of it all. I'm a smart enough man that we kept the forks, the silverware setting that she picked out, and a set of plates. Outside of that, I was mentioned to a friend of mine who worked at NCF. We went to church together, and I was just complaining about this process. He says, Eric, why don't you open up a giving fund at NCF? And so we did, and we actually asked people, instead of giving us stuff that we don't need or want, would you make contributions into our giving fund so we can use it for missions? And so that's what we did. That's how I got introduced to NCF. By God's grace, over $2,000 was given to our giving fund, and we used it to train some pastors in Indonesia not too long after being married. And so that was our introduction to NCF. And then in my business world, we grew the business. Like I said, it was a family business, but I kind of was running things and it took us to a sale and an exit. And after our exit, I made a gift into my giving fund at NCF. I wanted to dedicate the proceeds from the sale, so that way they were dedicated for charitable purposes, so I wouldn't spend them. But I also knew that I couldn't give them away in a responsible manner between then and year end. Literally, we closed on, it was the week before Christmas. And so there was no way I was going to be able to efficiently give that. We also had a real estate liquidity event after that, our commercial real estate. And I was excited thinking that we were gonna get some good numbers. And that whole depreciation recapture thing really beat me up, frankly. I was not as sophisticated as you are and many of your listeners. And so we did that. I was then starting a real estate business myself and a real estate investor. And a friend of mine knew that we loved Colorado. and have a heart of generosity the gospel missions and he said, Eric, you and your wife. You would be perfect to be to join NCF and be the president of the National Christian Foundations for the Rocky Mountain regions and tell other people not to make your same mistakes. And so, a little over six years ago now, I had the joy of joining NCF, and I've had the joy of telling people not to make my same mistakes. And by God's grace, I know that more dollars have been released for nonprofit work and kingdom work than ever would have happened from people hearing about the mistakes that I made. And that's what we're going to talk about a little bit of some of those mistakes and how to use the tax code in a way that be more efficient with our giving and more efficient with the funds that God's entrusted to us.

Whitney Sewell: Thanks for sharing that story. That's encouraging, Eric, and just the path that you have taken to get where you're at now. And even thinking back to when you were scanning this for the wedding registry and just the change of heart, right? It's so true, right? You get in there and it's like, man, we can just scan all these things. Maybe somebody will buy it. And I just love how you were convicted and, and you all took action that like, wait a minute, we don't, we don't need seven crockpots who needs seven crockpots. Right. Uh, it's just a change of heart there. Uh, and you took action. I love that, that you all did that and, uh, and introduced you to. you know, where you're working now, right? I mean, NCF, it's so incredible. So I want to introduce the, you know, the listeners, investors are listening, you know, to NCF as well, because I know they're going to have some of these same questions, right? And, you know, we received them and And thankfully, you gave me some really good questions for this, just so listeners know. He gets these questions all the time. And I've had some of these same questions also, as the listeners know. We have a foundation, and we want to help families adopt. And this is something we've considered. I've talked to Eric about it, and we should talk about it again. But often, Eric, we get a question, or you get the question, how can I make a bigger impact, right? How can I make a bigger impact or greater charitable impact? And I think through NCF, there's probably ways that people haven't even realized that they could have a bigger impact with those dollars, right, that they're hoping to give. Why don't you get us started there?

Eric Most: Yeah, absolutely. You know, we A little piffy thing we oftentimes say here is friends don't let friends give cash. Cash is truly the most inefficient way to be generous. And there are way, way, way better ways. And that's what we really specialize at here at NCF. And so we love to, to talk about more strategic ways to get funds into the charitable pocket. And so they can make a greater impact because the root benefit to using kind of donor advised funds is that it's legal, completely legal tax. avoidance or reduction in taxes and taxable benefits. And so fewer dollars in transactions that are going to the IRS that end up being able to be transferred into a charitable checking account that you're able to advise and CFM where you want to give to. And so, So yeah, so friends don't let friends give cash. And so what can this look like? So, you know, step one of, hey, I want to make a bigger impact. And we're going to get into ones that I think are specifically geared to listeners here to your show and into this webinar. But like step one, hey, I want to be more generous. If you're not using appreciated stocks and you have a stock portfolio, a taxable stock portfolio, that is the best way to get started. So if you said, Hey, I want to give away, and you can add as many zeros to these numbers as you want, and you can subtract zeros. Okay. But if you said, Hey, I want to give away $10,000 away this year, um, uh, to different nonprofits, my church, it could be to, um, uh, young life. It could be American heart association. It could be to help, uh, um, children with adoption work. It could be all these different things, but say, Hey, I want to, I want to give $10,000 away, or I want to give a hundred thousand dollars away. Instead of using our cash after tax basis to make those givings, right? And to write physical checks that we've paid tax on. Instead, if you have an appreciated stock portfolio, talk with your financial advisor and say, hey, let's find winners that we've held in our account for over a year. We want to get into the long-term cap game period and get away from the short-term cap game. and gift those instead of the cash. And so simply speaking, if you had, say you had Apple or Tesla in your portfolio that you bought over a year ago and it's appreciated, instead of giving the cash, you can actually give $10,000 worth of stock. to NCF. So you get a deduction for the full $10,000 on your, and you don't realize any of that as income. So you avoid paying taxes on that, that $10,000. You also don't pay any, we, NCF, when we receive it, we don't pay any capital gains on that. Okay. So you avoided capital gains. You avoided paying any income tax on this. And so let's say you bought it for five grand a couple years ago, it's now worth 10 grand. That's over $5,000 of cap gain that you're not being taxed on. So NCF receives it, we liquidate it, we put it into a charitable checking account for you, and then you're able to direct it to those nonprofits that you want to serve. So it's just a great, easy way to get started. We can then look at other, yeah, we can look at other, go ahead, go ahead. You get me excited, Whitney.

Whitney Sewell: No, I think it's exciting that this is an option, right? And it's just a different way of thinking. We think, well, we have to sell this thing to be able to get the cash, to be able to give it away. And technically we can give it away before we've sold whatever it is.

Eric Most: That's completely right. That's completely right. Yeah. And the key, and as we think about other asset classes, a key kind of thing to keep in mind in all of them is it has to be before any type of, especially the other asset classes, stock is one thing, but if you think about business or real estate or oil and gas rights or mineral rights, these all can be great tools of generosity as well. You just have to do it before you're under any type of binding letter of intent to sell. Binding is the key. The IRS considers this right to income. And so you can't have the right or like the guarantee to income off of a sale. As long as you do it before that happens, you can actually create a great tax deductible situation and also avoid the capital gains.

Whitney Sewell: Nice. So just to put it in layman's terms, before you get a contract on something, right, or you sign a contract to sell, you'd have to have this set up.

Eric Most: You have to have it set up beforehand. That is absolutely correct. Yeah. Afterwards, if you, if you get it and like, Hey, great, I got this under contract. I'm ready to make a, make a, make a gift. Now the IRS considers that a prearranged sale or an assignment of income. And that comes with it at a 200% penalty. And now just to be clear, also, I just want to give the blanket. I'm not a CPA. I'm not giving specific tax advice. you know, work with your tax advisors on these things. But also realize that we have NCF where we have over 30 offices across the country. And so you can have a local individual who can help work alongside your CPA and your tax folks, because sometimes these professionals that you have, they're not accustomed to people wanting to give money away. And so they might say, oh, no, no, you can't do that, or that can't be done. And I can guarantee you it can be done. And it happens all the time.

Whitney Sewell: How do I steward just these resources that have been entrusted to me more faithfully? How can you all help us with that?

Eric Most: It's such a great question. And I know that so many of us ask those questions. Especially, I mean, every business owner is going to ask these questions, right? Like, Hey, how do I steward these resources better? Folks that are believers, right? They feel this, this command to be wise stewards of all that's been entrusted to them. And so such a great, such a great question. You know, we, we talked about a little bit about earlier, like friends don't let friends give cash. And so when we look at our portfolio, we look at all that God's entrusted to us, 90% of our wealth is wrapped up in the things that we own, generally speaking, almost to a T across the country, and in other kind of Western cultures, and those of us that are generous. we do our giving and our living out of that 10% of cash that's available. And so it's the smallest percentage of our portfolio. And so at NCF, we love to come alongside and look at, hey, how do we access and how do we start using that 90% of assets that God has entrusted to us that are complex, their business, their real estate, their oil and gas, their water rights, their intellectual property rights. And so These, though, can be incredible tools of generosity. At any one time, NCF owns somewhere around, or right now, somewhere around $7 billion worth of business, real estate, intellectual property rights. And through our ownership of that, we're able to provide greater tax efficiencies that then creates almost like an arbitrage in allowing more dollars to be given away. And so, so a way to think about this is, and maybe we just do a couple different examples. Let's say this is a real estate show. And so let's talk real estate. So let's say I own a commercial property. It's a income producing property. And it's just one of my pieces in my portfolio and say, Hey, I wanted to give away, you know, I wanted to give away Pick a number. It doesn't even matter. Let's say I want to give $100,000 away. And that's what I'm already doing, but I'm doing it out of my cash, right? You know, bringing home a million dollars. I have a tithe mentality. I want to give away 10%. So $100,000, I'm giving away. Well, instead we can say, hey, let's look at the resources you have. And so let's take this real estate property you have. Maybe it's worth a million dollars, maybe it's worth 2 million, 5 million, it doesn't matter, even less. You could take that asset and gift it to NCF. or you could gift a portion of that asset to NCF. And so let's say it's a $2 million valued building and you want to take half of that building, 50% of that and gift that to NCF. By doing that, you're going to get a fair market value deduction uh for half a million or i'm sorry for for half of that asset value so it was a two million dollar billion building you'd get a million dollar deduction for your taxes that you can use this year if you can't use all of that deduction this year it has a five-year carry forward of that deduction so i'm using a complex asset class like real estate, the IRS will allow you to deduct up to 30% of your AGI in a single year. So you use that up to 30% and that's still more than you can carry that over for the next five years. Now, this property we talked about was an income producing property. And so after expenses, so after property management, after capital expenses, CapEx for the roof, the parking lot, yada, yada, profits that then flow into you, NCF would receive 50% of those profits. And we don't pay any taxes on it whatsoever. We pay no taxes on real estate income. And so you, as the property owner, have been able to avoid receiving that as income that you're now taxed on. And instead, those dollars are going into your charitable bucket, and they're going to create in liquid form that you now can write those checks that you normally would be writing to charity. So we talked about giving to your church or nonprofit, Young Life. It could also be American Heart Association or your alma mater, you're able to write those checks out and now you're not using your cash the least efficient way. And so that's one example of using real estate in an ongoing manner as a long-term hold. We can hold that asset in perpetuity. So literally you can think about your portfolio and say, hey, I want this one property here to be used as my charitable funding vehicle. And it's just an absolutely beautiful way to do things.

Whitney Sewell: Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.