Giving Back Through REI | Think Realty | A Real Estate of Mind
Investing Strategies

Giving Back Through REI

Why philanthropy should be a core part of every real estate investment business

No act of kindness, no matter how small, is ever wasted.”

Aesop in The Lion and the Mouse

What a year 2020 was.

With COVID-19 creating uncertainty in the housing market, you have certainly been busy. If you’ve entered into 2021 in good shape, give yourself a pat on the back. Success hasn’t been guaranteed during this pandemic.

You should also take time to reflect and be grateful for that success. It’s something I’ve been doing increasingly more with my team at DLP Lending, and it’s motivated us to take action through charitable activities, volunteering, donations, and more.

Because now more than ever, people need our help. As real estate investors, we have seen the economic effects of this pandemic firsthand. If our balance sheets are in good shape, we should heed the call and help where we can. Companies can do well while still doing good.

In fact, giving back and business success go hand in hand. Not only is giving back the right thing to do, but it benefits the bottom line.

Why we need philanthropy

You probably noticed that home prices jumped considerably in 2020. By the end of the third quarter, the median cost of a single-family dwelling hit $313,500 a 12 percent jump from the year before.

Data points like that may have some thinking that it is all sunshine and rainbows. But real estate investors, especially those who invest in multifamily housing, have seen a different story.

By May 2020, unemployment may have been as high as 16 percent. Specifically, workers in service sectors such as dining, hospitality, and travel were hit hard. While the unemployment rate has dropped considerably since then, the pandemic has caused eight million Americans to slip into poverty. Food banks have been busier than ever, with Feeding America estimating that one in six Americans could face hunger because of the pandemic.

The damage has been done. But while the situation may look bad, there is hope.

Continued economic recovery should help folks find work again and be able to afford rent. A vaccine should slow the spread of the Coronavirus and get life back to normal. And to help people withstand the rest of the storm, we should see more favorable policies for homeowners and renters.

Philanthropy should form another important part of the healing process. From food bank donations to assisting with utility bills, there’s a lot we can do for others in need. As real estate investors, we can do our part by leveraging our knowledge of one of the most important necessities: housing.

Giving back is the right thing to do

In real estate, we know what is at stake. Without massive federal stimulus and a national eviction moratorium, many renters wouldn’t have been able to pay their rent in 2020. Now, as the pandemic continues, many experts worry about an eviction crisis in 2021.

This should make every real estate entrepreneur concerned. Livelihoods are at stake, and we have the power to alleviate the situation. Specifically, we can utilize our unique skillset and resources to make a difference in our communities and around the world.

Remember the saying that “a rising tide lifts all boats?” By working to help the most vulnerable, we ensure a better tomorrow for our communities.

So, what specifically can we do?

Here are few philanthropic endeavors real estate entrepreneurs can do to solve the affordable housing and jobs crises in America.

Allocate capital or donate property for rent help, education grants, small business loans, and more

Real estate investors with good cashflow are in a solid position to help folks pay for rent, fund education, and create jobs. With housing prices at or near all-time highs in many areas, now could be the time to donate real estate to charity as well.

For example, if you want to donate a property, the Realty Gift Fund accepts real estate gifts, converts them into cash, and then donates them to nonprofit charities. By donating a property, you can help people in your community while getting a tax deduction.

You can also set aside a certain percentage of your capital for charitable use. DLP Lending has established the DLP Positive Returns Foundation. Through this foundation, we pledge to give:

  • ¼% of our capital raised to the DLP Positive Returns Foundation
  • ¼% of our net revenue to the DLP Positive Returns Foundation

This funding goes towards a variety of philanthropic activities, including rent and education assistance for those in need.

Promote homeownership and entrepreneurship

Homeownership has long been one of the best ways to build wealth. Real estate investors are in a unique position to promote homeownership.

One way to do that is through interest-free loans. Interest-free loans help homeowners to repair their homes and cover living expenses, which enables them to keep their homes and stay on a path toward financial security.

Another action you could take is to provide interest-free loans to local entrepreneurs. This will boost jobs in your area and help many climb out of poverty. One organization doing this well is Kiva, a nonprofit that provides 0% interest to small businesses. You could do something similar through a philanthropic arm of your real estate business.

Make volunteering a part of your business

Actions speak louder than words. It is one thing to say your business cares about the community. It is another thing to get out there and help.

You can embed philanthropy into your business activities. To give you some ideas, here are a few things we have done at DLP Lending:

  • Each of our team members contributes one percent of their paid time toward philanthropy.
  • We regularly host charitable events, such as blood drives and mask donations.
  • We work with charities such as Feeding America.
  • We assist charities with running more efficiently.

Philanthropy is good for business

The more you give, the more you get. Philanthropy can benefit your real estate operation in many ways. It can help your business:

  • Become mission-driven: A mission to improve your community and the wider world boosts workplace productivity. Purpose-driven companies grow three times faster than competitors, according to Deloitte.
  • Boost employee morale and improve culture: When team members feel they’re fulfilling a higher purpose, companies see 1.4x more engagement and 1.7x more job satisfaction.
  • Attract better talent: A survey found that 63 percent of millennials believe a company’s primary purpose should be to improve society. If you want the best talent, your company must have strong values.
  • Improve the local community: With a healthier local economy, your real estate investments will perform better.
  • Provide marketing opportunities: Doing good is a great way to get publicity from local news. It also improves your brand’s image, which inevitably opens doors to more opportunities.

Additionally, philanthropy has tax benefits. You can deduct what you give from your taxable income.

Giving back feels good. Studies have repeatedly found that those who help others live happier, more fulfilled lives. Make philanthropy a part of your business activities sooner rather than later, and you’ll quickly see that giving back to society is a gift that keeps giving.