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Aaron Hurst

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A $4.82 Billion Opportunity for Nonprofits

Posted: 09/16/11 04:26 PM ET

Eight years ago I bought my first house -- a lovely little 900 square foot abode in Glen Park, San Francisco. I had started Taproot two years earlier and was in the habit of turning everything I did into a fundraising opportunity.

So, one of the conditions I made for hiring a Realtor was that to get my business they would have to donate part of their commission from the transaction to Taproot.

Jim Prevo, a great Realtor, took me up on the offer. I then sent him the business of one of our team and a board member. In less than a year, he donated close to $20,000 to Taproot. It is a lot of money for any nonprofit, but at that time in our development it was huge.

There have been a few similar experiments I have seen over the years. There was a guy I met who was a waiter and every month would donate one day where all his tips and wages would go to one nonprofit. Nonprofits could pitch to him online every month to choose their charity for his monthly generosity.

It was in a sense a flavor of pro bono work. While he wasn't waiting on tables for a nonprofit, he was donating his professional time to generate cash for a nonprofit. So, de facto he was donating his professional skills to a nonprofit.

There was an outfit in Canada that enabled you to donate your skilled time (say as a graphic designer) to them to resell to anyone willing to pay. The catch was that the designer wasn't paid, the funds went to a social cause. Again, the professional used their skills to support a nonprofit.

Neither of these ideas reached a significant scale or critical mass, but a new service launched recently that has the makings of a game changer.

My Broker Donates is a new platform that enables philanthropically minded people to connect with real estate agents who have agreed to donate part of their commission to the charity of the client's choice. They can handle residential and commercial property, as well as leases.

What is promising here is that real estate transactions are large enough that even a small percent of the transaction generates significant income for a nonprofit. The average home price is well over $200,000. So a donation of 15 percent of the broker's fee would yield at least $750 for a nonprofit. In a city like San Francisco where homes are closer to $500,000, it would generate more than $2,000. Not chump change -- unlike a waiter's tips.

My Broker Donates is basically taking my experience with Jim Prevo and putting it on steroids.

This has the potential to enable every nonprofit in the country to get their existing donors, staff and board to convert their real estate transactions into revenue for the organization. And that would be for both when they sell and buy -- both have commissions.

If the real estate industry used the My Broker Donates model on all residential sales it would generate $4.82 billion in new revenue for nonprofits. But what if only 1 percent of all residential real estate transactions went to the nonprofit sector? They would still receive nearly $50 million.

The model creates a win-win-win: Non-profits love it because they get a new source of unrestricted funds. Buyers and sellers love it because they get connected with qualified agents while creating a donation at zero cost. Agents and brokers love it because it's a new pool of clients with zero acquisition costs.

My Broker Donates may or may not succeed for a million reasons, but the core idea here needs to be embraced. It is clear Realtors will share their commissions. So, no nonprofit professional or community minded American should ever buy or sell a home again without asking their agent -- Will you give part of your fee to the community?

With shrinking government spending, we need to be much more resourceful as a sector to make sure we can achieve our critical missions. It is nice to know now that not only can nonprofits depend on pro bono service to fill labor needs, they can convert it into cold hard cash.

 

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