Grant Administration: Section 9.5 Donations

Donations of property are permitted for most HUD funded projects. However, like all other acquisitions, the process is dictated by whether the acquisition is subject to the voluntary acquisition requirements at 49 CFR 24.101 (b) or involuntary acquisition procedures outlined at 49 CFR 24.102. The grantee must first assess whether the acquisition would fit the definition of voluntary or involuntary if it was not a donation. Then, the grantee should adhere to essentially the appropriate acquisition procedures with certain modifications due to the donation. Those modifications are as follows:

  • Notice: The owner must be fully informed of his or her rights under the URA, including the VAN or Notice to Owner at the earliest possible point in the project. The owner also must be informed of the right to receive a payment for the property. In addition, the owner must acknowledge his or her URA rights and release the grantee, in writing, from its obligation to appraise the property. The grantee must keep this acknowledgement in the project file. Attachment 9-9: Sample Notice to Owner – Request for Donation provides a sample form entitled “Sample Notice to Owner and Request for Donation” to supplement the notices required under the voluntary and involuntary process.
  • Property Value: If owner requests either that fair market value be set or just compensation established as applicable, provide that information to the owner. Once informed of the value, the owner can donate the property without having the appropriate value offered. Even in a donation, the property owner has the right to have the value (just compensation or fair market value) established, and then to be offered that amount just so that they can know what they are not accepting.
  • Complete Acquisition: If the owner decides to seek a part of the offer, or all of the offer and not a donation after all, that is the owner’s choice. The owner must be fully informed and make his or her own decision. Proceed to closing once the owner has agreed to either donate or make a partial donation of property. See Attachment 9-10: Sample Property Donation Agreement.

If the property would be an involuntary acquisition, grantees should follow the acquisition procedures, including the steps to determine just compensation. Adhering to those steps is particularly helpful in case the owner changes his/her mind to either not donate or only partially donate the property.

Also, grantees should avoid giving tax advice that the property amount donated can be used for tax purposes. Instead, if asked, refer the owner to an accountant or the IRS regarding whether a donation can be used for tax purposes.

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