National Legislation Would Handicap Local Land Trusts

Bob Keller serves on the Whatcom Land Trust board of directors and Daniél Morgan is the organization’s development director. The views in this essay are theirs alone and do not necessarily reflect those of the trust.

Over a century ago the German theorist Max Weber described how social institutions typically depart from an original high-minded purpose to become primarily self-serving. It turns out that even environmental organizations are not immune to the suction of self-interest.

The Nature Conservancy (TNC), superpower of “Big Green” organizations (such as the National Audubon Society, Sierra Club, the Wilderness Society, World Wildlife Fund, etc.), two years ago fell victim to Weber’s principle of ultimate self-serving. In May, 2003, Washington Post investigative reporters Joe Stephens and David Ottaway published a hard-hitting series of articles about scandal within the organization. They described oil and gas drilling at a Nature Conservancy endangered bird sanctuary, including angle drilling into an adjacent private landowner’s petroleum reserves.

Stephens and Ottaway told of manipulated conservation easements in Kentucky, New York, Michigan and New England that enriched board members and major donors. Conservation easements are binding legal agreements between a landowner and private, nonprofit conservation organizations or a government agency to permanently limit property uses in order to protect conservation values.

In New York, for example, the Nature Conservancy spent $2.1 million for an undeveloped tract next to a nature reserve, placed a conservation easement on the land, then sold it as a homesite to their local chapter chairman for $500,000. The chairman, James Dougherty, in turn “donated” $1.6 million to the conservancy—a tax deductible “gift.” According to the Post, the Nature Conservancy has engineered dozens of similar deals for its friends and supporters.

Speaking of friends, Nature Conservancy has many board members high in the corporate world: General Motors, Georgia Pacific, Exxon, BP and Dow Chemical to cite a few. All this is normal. The “Big Greens” resemble major corporations more than grassroots organizations such as Nooksack Salmon Enhancement, the Ecosystem Alliance, Skagit Land Trust, RE Sources or the North Cascades Institute. Nature Conservancy has over one million members, its assets number in the billions, with an annual operating budget of $700 million to support 3,200 employees. The president, Steven McCormick, earned $420,000 his first year, with a discretionary fund of $23 million. He also secured a $1.5 million TNC loan to purchase his home in McLean, Virginia.

The Post revelations prompted Nature Conservancy to retain high-powered public relations and law firms. A full-page TNC ad in the Post glowed with self-praise but did not respond to any charges. Belatedly, Steven McCormick confessed that the organization had “fallen short.” Indeed, they had fallen short enough to inspire a full-scale congressional investigation of nonprofit conservation tax abuses, with a special eye to organizations who receive tax-deductible donations of land or conservation easements (Washington Post: May 4-13, 2003; Oct. 25, Dec. 21, 2003).

Why are conservation easements so important? Land “ownership” in the U.S. means possessing multiple “rights” of use (e.g. to extract minerals, drill a well, restrict access, build roads and buildings, remove plants) within a given set of surveyed boundaries. As a landowner you “own the right” to cut down all your trees or build as many dwellings as local zoning allows. A conservation easement gives one or more of these rights to a land trust that in turn agrees to hold those rights without exercising them. Such a restriction remains in force regardless of future owners.

Conservation easements provide effective tools for local communities and private individuals to voluntarily protect cherished landscapes, allowing land trusts to be extremely successful at conserving wildlife habitat, forests, waterways and wetlands, shoreline, working farms and ranches, parks and open spaces. As of 2003 over 1,500 land trusts in the United States had collectively conserved over five million acres through conservation easements and another 4,300,000 through purchase or transfers.

A local instance of a conservation easement is Squires Lake Park near Alger. The Whatcom Land Trust purchased the land and then placed a conservation easement on it before transferring the title to Whatcom County—the agreement prohibits roads, motorboats, logging and loud and intrusive human activities. With such an easement, even the government can never legally transform this quiet special place into a noisy playground.

If we consider that new construction accounts for the loss of two million acres across America annually, land trusts collectively protecting over 800,000 acres per year is impressive—a ray of hope amid steamroller growth (“Land Trusts Double the Number of Acres Protected: 2003 Census Reports on the State of Land Trusts.” Exchange. Land Trust Alliance. Vol 24 No 1, page 10, Winter 2005).

This ray of hope may dim. Recent recommendations by Congress’ Joint Committee on Taxation, spurred by the Nature Conservancy scandal, could, if passed, cripple the grass-roots conservation movement. In addition to decreasing allowable tax deductions for a conservation easement, the committee recommends no deductions for easements on property used as a personal residence. Deductions must also be based on less than market value and must directly enhance some government program.

This, we would argue, is unfair and limiting. A conservation easement involves a major commitment for any landowner. Although tax benefits may result from such a gift, the choice to protect family property is always less lucrative than other alternatives. At present the top return to a landowner for donation of a conservation easement is only about 38 percent of appraised value: the committee’s recommendations would result in a return of no more than 12.5 percent.

If enacted, these recommendations will severely limit the ability of individuals and families to conserve their land through voluntary means. In our American society that lauds private property as a holy civic right, Congress seeks to derail voluntary goodwill actions. The proposed legislation is frustrating because, while it may have a swift and debilitating affect on grass-roots conservation across the nation, it will fail to arrest the fraudulent abuses of the few (but aggressive) unethical developers, appraisers and donors.

Once passed, the legislation will handicap small local land trusts who do not wheel and deal with the rich and who already operate under strict ethical standards. Locally, the Whatcom Humane Society scandal of several years ago sounded an alarm bell for all Whatcom nonprofits: lose community credibility or goodwill and you may lose the ballgame.

The Whatcom Land Trust (WLT), to cite an example with which we are familiar, has never manipulated an easement to inspire donations or to help avoid taxes. It does not broker land deals to benefit board members. The only WLT board member with a local easement declined to take any of the legitimate tax deductions for his donation of property rights. Others directors promptly excuse themselves from meetings when conflicts of interest occur.

The Whatcom and Skagit Land Trusts shy away from all private tax-saving calculations, and advise landowners to hire independent, professional appraisers. These local land trusts enter into long-term, self-corrective, cooperative partnerships with private landowners and local institutions (e.g. County Parks, Western Washington University) that have a strong interest in maintaining legality and upholding conservation goals.

Returning to Max Weber’s theory, we believe that temptations luring environmental organizations away from their altruistic goals increase as organizations such as Nature Conservancy, the Wilderness Society and World Wildlife Fund expand and inevitably become more bureaucratic. Whatcom County’s energetic and outstanding grassroots environmental organizations remain small and retain their integrity through direct contact with their members, their donors and the public at large. We also realize that the Whatcom Watch is watching. Closely, we hope. §