Down payment and donative intentElisa BlackDown payment assistance
John and Susan Jones (names changed to protect the generous) had
lived in a small farming community all of their married lives.
Their children are grown and now have children of their own. So,
John and Susan decided to sell their house and move into their
dream home. This was the home they'd planned and saved for. It was
big enough to accommodate the children and grandchildren at
holidays.
A young couple, first-time homeowners, purchased the Jones's old
place. "We remember how difficult it was starting out," said John.
"We wanted to make the purchase as easy and simple as possible."
So, John and Susan allowed a down payment grant to be used in the
purchase of their old home.
There are two misconceptions about down payment grant programs.
The first is that John and Susan paid the down payment for the
family purchasing their home. The second is closely linked with the
first, namely that the down payment organization isn't a charity so
much as it is a company brokering a deal between buyer and
seller.
When the young couple came to the closing, the money for the
down payment had arrived courtesy of the charity providing it.
After the sale had finished, John and Susan authorized their
closing agent to disburse a predetermined portion from the proceeds
of the sale to the charity that had provided the original down
payment grant. Where will John and Susan's money go? It will go to
assist the next individual or family that applies to the charity
for a down payment grant. It is vital to understand that in the
entire transaction, John and Susan Jones are supporting the mission
of the down payment program to help others achieve homeownership
and enjoy the benefits that they have experienced.
But, let's get real. If John and Susan had said no to the
buyer's idea of using a down payment grant, would their house have
sold? Probably. But in the Jones's case, they didn't wait to see
what other offers came in. When the potential buyers came forth
with their offer, the Joneses were genuinely pleased at the idea of
supporting families just starting out. They participated in the
program with genuine donative intent.
So, the question is: are sellers receiving incidental benefits?
Is this a bad thing? Does this mean that sellers are not charitably
minded? I donated to the Salvation Army, which resulted in me
having a cleaner closet and a doughnut on the way out the door.
Should I return my doughnut, lest I not be acting in the true
spirit of charity? (One could argue that the doughnut is a
significant factor in my expanding waistline, which directly
results in more donations of clothes to the Salvation Army.)
Non-profit down payment organizations have created a unique
opportunity for home sellers to become considerable charitable
forces in their communities. When a seller sells his home, he is
making the biggest sale of his life. This is probably the biggest
single financial windfall the seller will experience in his
lifetime. The seller's disbursement to the charity comes directly
from the proceeds of the sale. There is no better or more
convenient time to make a charitable donation to a non-profit
organization that promotes homeownership.
A person selling his home will have experienced the benefits of
homeownership. The seller can understand the significant financial,
social and emotional advantages his donation will give a future
family. Also, at the time of the sale of his home, the seller has
probably never been in a financial position more conducive to
donating to a charity.
We are doing a disservice to sellers when we accuse them of
lacking in charitable or donative intent. We are also implying that
the only reason a house would sell is because of the potential down
payment grant. This implication dismisses the role of real estate
agents entirely and suggests that they could be completely replaced
by a "zero down" placard in the front yard.
At the heart of the matter of non-profit down payment
organizations is heart. They call it charity for a reason. Down
payment charities have found an ingenious way to enable the seller
to become a significant charitable force without having to forgo
regular eating habits and allow young families to get into homes
faster. Do you regularly use down payment grants with your home
loan products? Ask your down payment organization where their money
goes. Look to see how their funds are being used in the community.
Ask how you can become involved. Chances are, they can help you
become a significant charitable force, too.
Elisa Black is director of marketing and communications for
the Esther Foundation, a Utah-based non-profit organization that
works to strengthen communities by helping people to become
homeowners. She can be reached at (866) 743-7795 or e-mail
[email protected].
