"Created 40 years ago, the provision allows property owners to take a charitable deduction for donating qualified conservation easements—legal agreements that permanently limit the development or use of a property—to a charitable organization," he explains. "But some donors are abusing the provision by applying grossly inflated appraisals to the value of the easement to increase their charitable deduction or by taking donations for easements that do not fulfill bona fide conservation purposes. Some real estate developers exploit these vulnerabilities by selling the rights to claim charitable deductions to investors and using the proceeds to finance development, which costs taxpayers hundreds of millions of dollars per year and undermines the program’s conservation goals."
Additionally, "most organizations that receive donations of easements do not report them as gifts or revenues on their public tax returns," he writes. "The tax returns of charitable and tax exempt organizations are public to provide information about the activities of the charitable sector, to provide transparency and accountability, and to help reduce any abuse of tax-exempt status." However, transparency only works if organizations report charitable gifts on their public tax returns.
Read Looney's full report here.