Kauka wanted to benefit financially from the sale of the property, but she also hoped to protect it from overdevelopment. The land includes four miles of riverfront and pristine habitat for the endangered red-cockaded woodpecker, as well as what Kauka describes as extraordinary botanical specimens, including orchids, cacti and carnivorous flowers.

To achieve both goals, she ultimately sold River Creek Plantation for the reportedly below-market sum of $9.5 million to the Conservation Fund, an Arlington, Va.-based nonprofit organization that has, since its inception in 1985, protected more than 5 million acres in the United States. After completing the deal with Kauka, the organization sold the property to the state of Georgia for $7.3 million in 2005. With assistance from the Doris Duke Charitable Foundation and the Tall Timbers Research Station, Georgia was able to create the Rolf and Alexandra Kauka Wildlife Management Area, a valuable addition to the state’s protected lands.

TOP VIEW: While famous philanthro- pists such as John D. Rockefeller are remembered for protecting millions of acres of open space, concerned landowners have often overlooked the benefits of donating property for preservation—until recently. Today, donors have options for preserving treasured natural vistas that enable them to reap some benefit from the land’s value. To achieve their philanthropic goals, while securing tax deductions, affluent donors are working with conservation groups to create financially complex gifts that include stocks, low-interest loans, gift annuities and commercial real estate assets.

Everybody won: Kauka was able to protect the land she loved while achieving liquidity, along with the potential for a significant tax deduction based on the $1 million difference between the land’s market value and the amount for which she sold the property. The Conservation Fund achieved its goal of preserving pristine land. And the people of Georgia paid far below market price for an asset that will benefit generations to come.

Donation deals such as Kauka’s are a financially advantageous, yet often overlooked, avenue of philanthropy, offering donors a host of options for preserving cherished natural spaces while benefiting from the land’s value. Significant deductions in estate and income taxes represent the simplest way to benefit from a donation, but benefactors are working strategically with conservation groups to craft financially sophisticated donation strategies that deliver even greater value to both parties.

For their part, conservation fund executives are increasingly reaching out to affluent potential donors, stressing a variety of financial and philanthropic strategies available to anyone interested in creating a legacy that can quite literally encompass mountains, rivers and rainforests. "We’re seeing more complex gifts," says Mary O’Connor, vice president of development for the Conservation Fund. "By complex, I mean gifts that have a variety of facets: A portion of it is cash, a portion is a piece of land, or a house, or an apartment building, or a commercial piece of property we can then sell. They can be stocks or in the form of a low-interest loan. We take all those pieces together and roll it up so we can get to something that balances the needs of the organization with the needs of the donor."

Virgin Territory

THE LATE German cartoonist Rolf Kauka and his wife, Alexandra, often ate breakfast looking out over their Georgia plantation, River Creek . Alexandra Kauka sold the estate to the Conservation Fund for less than market value in order to limit its development.

Stephen Small is a Boston-based attorney who, as a former advisor at the IRS, wrote portions of the income tax regulations that govern conservation easements. Small has since published several books on preserving family land. He now lectures on the topic and specializes in helping clients understand how gifts of conservation land and easements can help protect assets from estate taxes. Despite the recent IRS crackdown on abusive easement deals (see "Proceed with Care," page 82), he says, "Most of what’s going on in this field continues to be good—and there are good deals."

According to Small, in terms of financial incentives for donors, tax deductions represent the lowest hanging fruit; if they are applied correctly, they can deliver substantial benefits. For example, individuals making gifts of land or easements to conservation groups can receive federal tax deductions of up to 30 percent of their adjusted gross income. For gifts of cash, that amount rises to 50 percent, he says.

RIVER CREEK

Money manager C.E. "Pat" Patterson and his wife, Berniece, of Contra Costa, Calif., wanted to make a cash donation of $250,000 a year, over the course of five years, to the Nature Conservancy, the nation’s largest land conservation nonprofit, in order to preserve part of a pristine rainforest near Annaly Bay in St. Croix, not far from their vacation home. In structuring their donation this way, they will also receive potentially large tax deductions over the life of the donation, which began in 2005.

Yet, tax considerations were not the Pattersons’ sole motivation. Their bequest was a natural outgrowth of their love for travel and the outdoors, coupled with the influence of like-minded conservationists who were in their circle of friends. The Pattersons, both 65, put no restrictions on how their money might be spent, only that it be used to cover costs associated with preserving the land their family knew and loved. "We have a tendency to go toward projects with a little more evidence of what impact we might have," explains Patterson, an avid outdoorsman who shares his passion with his wife, four children and nine grandchildren. "Candidly, we never understood the appeal of making large donations to the university or opera."

RIVER CREEK

Whatever their impetus, passionate environmental donors of means are more welcome than ever before, say leaders of some of the nation’s largest land conservation groups. Individual participation can make a critical difference to these organizations when they attempt to raise funds to protect or acquire environmentally significant property when it becomes available on the open market. Large infusions of money also allow national land trusts to buy property for smaller local land trusts or government entities that do not have ready cash on hand. In 2002, Big Sur Land Trust in Monterey County purchased nearly 10,000 acres of a 12-mile corridor stretching from Carmel Valley to the Ventana Wilderness for $37 million—a deal that was possible with help from both state bond money and the Nature Conservancy.

Local land trusts are very "grass roots," explains Bill Leahy, executive director of Big Sur Land Trust. "We are putting [land deals] together on a shoestring, and rely heavily on public funding and conservation easements to put the deals together."

"By complex, I mean gifts that have a variety of facets . . . We take all those pieces together and roll it up so we can get to something that balances the needs of the organization with the needs of the donor."

Still, conservation benefactors remain a relatively elite group, with donor interest in land preservation lagging far behind large-scale contributions to universities, medical centers, churches and the like. According to Giving USA, a national nonprofit that collects and publishes philanthropy data, just 3.1 percent of all charitable donations in 2004 went to environmental causes.

While historically notable philanthropists such as John D. Rockefeller acquired and donated swatches of land for preservation, "giving green" to save and preserve land is a relatively new concept, Small says, adding that leaders in the land conservation movement are still struggling to determine the best way to raise acquisition capital. At the same time, donor expectations are changing. "It used to be a very arm’s-length, almost passive relationship between the donor and recipient. Now, we’re seeing more encouragement and interest in results-oriented, investment capital," says Larry Selzer, president of the Conservation Fund. "That poses challenges, but it also provides great opportunities."

PAT AND Berniece Patterson are contributing money over a five-year period to preserve part of a rainforest near their family vacation home in Annaly Bay, St. Croix.

Other creative donation opportunities include gift annuities or the donation of residential or commercial real estate that can be sold to benefit a conservation group. Finally, a remainder trust enables donors to continue to use their property until their death, at which time the balance of the trust’s value transfers to a conservation group named as beneficiary. The myriad of options provides donors with flexibility, and with an opportunity to precisely fund a cause they are passionate about—and retain control over where their money is flowing. On St. Croix, for example, the Pattersons worked with local officials and the Nature Conservancy to make an impact on a part of the world they treasured. "They were able to point us to something we could visualize," Patterson says. "That was important to us."

Capital Steps
Because the concept of conservation philanthropy remains unfamiliar to many people, Small explains, the financial scaffolding surrounding such donations has traditionally remained somewhat unsophisticated. But as environmental issues across the U.S. become pressing, and more pristine land and water fall prey to development, the finances of environmental philanthropy have become more complex out of necessity.

JESSE FINK, cofounder of Priceline.com, has donated more than 120 acres and $1 million to conservation groups.

Over the past three years, Jesse Fink, a cofounder of Priceline.com, based in Connecticut, has donated roughly 120 acres in Colorado and on Long Island to conservation groups. He also has made cash donations of more than $1 million to the Nature Conservancy and the Student Conservation Association. At the same time, Fink’s own company, Marshall Street Management, and its investment arm, MSM Capital Partners, have funneled millions of dollars into return-driven investments in the environmental sector. That led to the creation of MissionPoint Capital Partners, a company open to outside investors. "In conservation, the biggest issue that I see is when it’s time to show up for the deal, the money’s not there," Fink says. With his wife, Betsy, Fink has created a family foundation for environmental giving; they hope to ultimately make land conservation more fiscally sustainable. "I think the next generation [of environmental philanthropy] will involve donors taking part of their municipal bond portfolio or their hedge fund and figuring out how to invest it in a bond to preserve open space."

Some environmental organizations have embraced Fink’s vision by engaging in deals that enable them to continue to make money off the property they purchase, and then use that money for land acquisition and other conservation activities. In 2004, the Conservation Fund purchased 24,000 acres of working forest in Northern California’s Mendocino County from Hawthorne Timber for $18 million, with plans to log some trees there to garner cash for ecological restoration.

"I think the next generation [of environmental philanthropy] will involve donors taking part of their municipal bond portfolio or their hedge fund and figuring out how to invest it in a bond to preserve open space."

Organizations also are working with for-profit landowners to achieve their goals. In March, International Paper, one of the world’s largest private landowners, the Nature Conservancy and the Conservation Fund partnered on a deal that will allow the two nonprofit groups to purchase 218,000 acres of forestland across 10 states in the South. Under terms of the agreement, International Paper received $300 million and the right to continue to harvest sustainably on much of the land. Some environmentally sensitive areas will be placed off-limits to loggers.

The Nature Conservancy also offers a conservation buyer program, in which the Conservancy identifies and purchases property in ecologically important areas, and then resells it to individuals who are willing to either buy it with a conservation easement in place or create an easement on the property. Philanthropists can contribute to the Conservation Buyer Fund or they themselves can become a conservation buyer and potentially realize tax benefits for donating their conservation easement. The buyer program is an example, supporters say, of how land conservation groups have been able to meet the needs of their donors and still make smart business decisions.

CONSERVATION GROUPS Nature Conservancy 703.841.5300, nature.org  Conservation Fund 703.525.6300, conservationfund.org  Trust for Public Land 415.495.4014, tpl.org   American Farmland Trust 202.331.7300, farmland.org

Conservation groups are also learning that they must be more receptive to philanthropists’ input in order to attract their donations. Fink has earmarked some of his contributions to the Trust for Public Land and the Nature Conservancy to help fund internships designed to encourage high school and college students from diverse backgrounds to explore careers in conservation. Fink holds a degree in environmental resource management and spent time as a National Park Service volunteer with the Student Conservation Association; he calls the experience life changing. He envisions his gifts inspiring future students to consider a career in environmental preservation.

For Kauka, preserving wild land was also the fulfillment of a lifelong love of the natural world, honed on childhood hikes in Germany and Austria. "When we bought River Creek Plantation, we were enormously impressed by its unique flora and fauna capacity," Kauka says. "If the land has environmental value and uniqueness, you owe it to the land to preserve it for future generations."

To learn more about local land trust organizations, contact the Land Trust Alliance, 202.638.4725, lta.org.

Jill Duman is a freelance writer who is based in Davis, Calif.

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Proceed with Care