Background: Millions of acres of important habitat, open space, viewsheds, and cultural sites on privately owned land have been permanently protected by conservation easements under IRC 170 (h). Conservation easements and the related federal and state tax deduction and credits are widely recognized as being cost-effective public investments in the nation’s best interest.

Congress and the out-going Administration have recognized the importance of conservation easements. In the 2008 Farm Bill, additional tax incentives related to landowners’ federal income taxes were provided that increased the deduction from 30% to 50%, allowed farmers and ranchers to deduct up to 100% of their income, and increased the number of years over which a donor can take or spread the deduction. The current added incentives for donating conservation easements are a two-year provision that will expire with the 2009 tax year.

Today, the average age of agricultural landowners continues to increase, and the interest in fee-simple donations of land is increasing. Congress has recognized the importance of charitable giving and the important role non-profit organizations play in our nation and our quality of life by passing a two-year authorization of the Public Good IRA rollover, which allows direct-gifting Individual Retirement Accounts (IRAs) after age 70½ with certain limitations through the 2009 tax year. This authorization has provided many landowners with a strong incentive to donate their land in fee-simple for the purposes of preservation of wetlands and waterfowl habitat.

Need: Private lands are critically important to the future of the environment and the wildlife habitats that associated species need to survive and flourish. Land use decisions, often made reluctantly by private landowners because of economic pressures, can diminish and in many cases eliminate the value of these lands as valuable natural habitats. Experts agree that in order to conserve these important privately owned habitats, we must substantially increase the rate at which we protect these natural values.

Many private landowners want to donate land with high habitat values to public agencies or non-profit conservation organizations to realize tax benefits for charitable giving. However, the level of financial support from generous, philanthropically oriented Americans is a limiting factor in the scope of programs and effectiveness of non-profit conservation organizations. Increased tax benefits for land donation for the purpose of habitat preservation will encourage more landowners to conserve their property. These donations, in exchange, provide unparalleled benefits and protection of America’s most important and valuable natural areas.

Recommendations: DU recommends that the Obama Administration support these important conservation tax policy initiatives:

• Provide leadership in making permanent the tax incentives for donated conservation easements authorized in the 2008 Farm Bill so that private landowners can undertake financial and conservation planning beyond 2009.

• Develop policies and initiatives to increase tax flexibility and incentives for landowners who make fee-simple land donations to government agencies and qualified non-profit conservation organizations.

• Make the IRA direct gift provision that expires in 2009 permanent.

• Lead expansion of the IRA charitable rollover options to include life income gifting plans, (charitable remainder annuity trusts, charitable gift annuities with immediate payments and standard payout charitable remainder unitrusts) to provide taxable income to donors, improve the financial strength of charities during difficult economic times and bring about increased federal revenues to our nation’s treasury.
  
• Explore opportunities to enact tax credits that can provide conservation incentives to both individuals and business.