The Washington Post this week had a series of articles about The Nature Conservancy, a nonprofit dedicated to buying and preserving land. They’re a big organization (one that I’ve supported for many years and will continue) and in their zeal to preserve land they get into dealings as questionable as some similar size corporations. And it is worth noting that when the head of a charitable organization calls himself the “CEO” you’ve got trouble.
Anyway, this one particular part of the series deals with a piece of land on Martha’s Vineyard. The owner was looking for a way to subdivide and develop the land, but the authorities would let him rezone the land. So he lined up some buyers including The Nature Conservancy and told the authorities he was selling the land to the Conservancy. All the sudden he wasn’t a bad guy anymore. To sweeten the deal he asked that he be granted permission to subdivide the land into 35 parcels which would greatly increase the value from the planned six lots. In fact it increased the value by $14 million. The guy then sells the land for the original appraisal of $64 million but writes off $78 million. Basically the guy got the full value of the land plus a $14 million writeoff.
But all’s well that end’s well, right, because the Nature Conservancy can preserve this land now. Not exactly. $45 million of the purchase price came from “donors” who would get to build on the property! In fact, one guy is building a $14 million mansion. And half the land will become an “educational farm” so it won’t really be preserved. And one of the other donors (David Letterman) got to keep the mansion that was already on the property. Of course I’m sure the “donors” all wrote off their donation to The Nature Conservancy as well.
Because the article involves math, I’m sure nobody will really care about what it says. But the bottom line is these guys all got to dodge millions of dollars in taxes and still build vacation homes.
The whole series is very good, but a little depressing. There’s another story where the Conservancy bought land from a lumber company but in order to afford the price they agreed to “sell” the lumber on the land back to the company. This way the company wrote off a huge donation (including the value of the timber) but still wound up with the lumber and left the conservancy with stripped land to replant.
When you hear that rich people don’t pay taxes, this is how they do it.