About Land Trusts
What is a land trust?
A land trust is a charitable organization that purchases or accepts donations of land or easements or that holds land or easements for conservation purposes.
Land trust efforts revolve around working cooperatively with landowners and crafting projects with win-win outcomes for communities.
Land trusts vary in character and priorities. Most land trusts are private charitable corporations. Some are governmental or quasi-governmental agencies that operate with much of the flexibility and freedom of a private land trust. Some land trusts are quite small, run entirely by volunteers, doing their work in just one municipality or small watershed. Some utilize large staffs of professionals and work regionally or nationwide.
Some land trusts own and operate preserves and recreation areas open to the public. Others own no land at all but hold conservation easements, which protect certain natural values on properties. Others work to acquire and then transfer critical land to government for use as parks or game lands.
Land trusts may have one or more conservation priorities. They may conserve land to protect our rivers, streams, and groundwater. They may protect community open space for new parks, scenic views, wildlife preserves, or neighborhood gardens. They may conserve productive farmland or working forests. Some focus on protecting biodiversity while others preserve traditional hunting grounds.
A land trust is defined by what it does—not by what it’s named. Organizations such as the Northcentral Pennsylvania Conservancy, the Foundation for Sustainable Forests, and the French & Pickering Creeks Conservation Trust are all land trusts but none use the term “land trust” in their names.
Many (if not most) land trusts do more than acquire and hold real estate interests. They may run education and science programs, maintain trails and other outdoor recreational facilities, help municipalities with land use planning, manage historic sites, or engage in any number of other activities. Each organization makes its own decisions regarding its programming and priorities.
Land trusts work in all fifty states, conserving land using a variety of techniques. Ninety of these organizations work to protect Pennsylvania’s special places. Regardless of size, methods, and priorities, land trusts share a commitment to conserving important lands for the people of today and for the generations not yet born.
Land Trust Standards and Practices
Land Trust Standards and Practices are guidelines to help land trusts operate in ethically, technically and legally sound ways. They guide land trusts in conducting sound programs of conservation land transactions and stewardship, helping to ensure the long-term protection of land in the public interest. The governing boards of most land trusts have expressed the intent of bringing their operations into conformance with Standards and Practices, signifying this through an Adoption Resolution.
Find a Land Trust
Visit ConservationTools.org to search for Pennsylvania land trusts (and other conservation organizations).
Land Trust Accreditation
The Land Trust Accreditation Commission, an independent program of the Land Trust Alliance, provides independent verification of key practices from Land Trust Standards and Practices that show a land trust’s ability to operate in an ethical, legal and technically sound manner and ensure the long-term protection of land in the public interest. The Commission accredits nonprofit applicants who demonstrate compliance with all of the accreditation indicator practices. The Commission’s accreditation seal is a mark of distinction in land conservation. It recognizes organizations for meeting national standards for excellence. Accreditation is voluntary.
A land trust should not be judged purely on the basis of whether or not it is accredited. A land trust may operate at the highest levels of excellence and choose not to be accredited. Securing and maintaining accreditation involves substantial administrative costs. A land trust, in choosing whether to pursue accreditation, must balance the benefits of accreditation (e.g., improving and fine-tuning policies and operations) against the time and resources that will be taken away from its direct conservation work.
Establish a Land Trust
If a conservation need is not being met in your area and you think a land trust might be the answer, you may want to order a copy of the Land Trust Alliance’s Starting a Land Trust. This excellent publication covers a lot of ground.
You can also explore Find a Land Trust to identify land trusts by geographical location. After you have read Starting a Land Trust and researched local land trusts, you may want to contact the Pennsylvania Land Trust Association, a support organization for Pennsylvania’s land trusts, for additional guidance.
Ultimately, you might start a wholly new organization, modify the mission of an existing organization such as a watershed association, or work with an existing land trust to expand its geographic interest into your area. Regardless, you will find that people—especially local people—are at the root of accomplishing conservation. You will need to work to identify and tap the energies and resources of all who are sympathetic to your conservation concerns.
Land Conservation Options
To understand the powers of a land trust, one must have a basic understanding of the types of property ownership available to the organization.
Fee-simple ownership of land gives a landowner maximum control over the use and management of the property and its resources. Generally, when someone owns land in fee simple, they have a title to the land. A land trust holding title to a property may provide the strongest guarantee of long-term conservation, but fee ownership is not always the best option or even a viable one.
A landowner may not wish to give up all control over their land. A land trust may not wish for fee ownership for any number of reasons. For instance, an organization may lack the resources to purchase the property or meet the long-term demands of ownership. In these cases, a land trust may work with a landowner to secure a conservation easement.
Landowners have the right to use their property for many different purposes, subject to local zoning and public health and safety requirements. An owner can plant trees or cut them down, build buildings or demolish them, grow crops or dig holes, allow public access or prohibit it, subdivide the property, etc. To understand the conservation easement concept, it is helpful to think of these rights as a bundle of rights. A landowner may donate or sell the whole bundle, or just one or two of the rights in the form of a conservation easement.
A conservation easement is an agreement between a landowner and a conservation organization that limits certain specified uses on all or a portion of a property for conservation purposes while leaving the property in the landowner’s ownership. Easements are, almost without exception, of perpetual duration. They are recorded at the county office where all deeds are recorded, and the easement’s terms are binding on all future owners of the eased parcel.
Every conservation easement is unique, the terms of the easement tailored to the particular property and to the particular goals of the landowner and conservation organization. For example, an easement might state that no building or road may be placed within 200 feet of a stream passing through a property, yet allow for a house to be built on another portion of the same property. Another easement might permit farming on a property but forbid residential, retail, and industrial development. Yet another easement may prohibit all activities except for sustainable forestry and recreation. The flexibility and applicability of conservation easements is nearly endless.
A variety of methods exist for acquiring conservation easements and fee interests in land. Some transactions are quite simple—a landowner may donate a property or conservation easement to a land trust. Other transactions may be rather complicated, involving combinations of techniques. Because each property is unique, the key to saving land is finding the technique or combination of techniques best able to provide the protection desired by the parties involved. Complicated projects may involve several different players, including conservation organizations, developers, government agencies and individuals, as well as various sources of funds.
A land trust’s preferred method of acquisition is, of course, outright donation by the landowner.
Donations can generate substantial benefits for the landowner. The donor’s federal income and estate taxes often can be significantly reduced with a properly structured donation. Some form of conservation donation can be critical in cases where the landowners have an emotional attachment to the land and wish it to stay in the family. Although many donors have a strong philanthropic motive, the tax benefits certainly give an appealing additional impetus for conservation donations. The specific tax benefits and the requirements for receiving these benefits are described at length in other publications.
Landowners may donate almost any property right or interest in their land, including the entire parcel in fee, a conservation easement, or other property rights such as an option or lease. Some donation variations are described below:
- A landowner may leave land, a conservation easement, or other assets to a land trust in his or her will. Donation by bequest can reduce the estate tax for the donor’s heirs by removing the value of the donation from the taxable estate. However, because the gift does not vest until the donor dies, there are no income tax benefits. [Learn more at http://conservationtools.org/guides/show/53]
- Conservation Easements.Conservation easements are usually acquired by way of donation. To qualify for a deduction, an easement must first be donated in perpetuity. Second, it must be given to a qualified organization such as a land trust or public agency. Third, it must be given exclusively for conservation purposes. [Learn more at http://conservationtools.org/guides/show/19]
- Remainder Interests. Landowners may donate their land to a land trust but reserve the right to live on or use the land for their lifetimes. Since this reservation could have considerable value, especially if the donor is relatively young, donations of remainder interests can result in considerably smaller tax benefits than outright donations. Learn more at http://conservationtools.org/guides/show/20]
- Undivided Interests. An undivided interest is a portion of an entire interest in a property. Landowners may donate undivided interests in property over a period of time, As such, an owner of undivided interests in a property becomes a co-owner of the property, sharing in all ownership rights. While a conservation organization may be uncomfortable with a co-ownership arrangement, even when temporary, a landowner may find the donation of undivided interests over time preferable for tax purposes.
In a bargain sale the landowner and land trust negotiate a purchase price below fair market value. Bargain sales can be an attractive option for landowners who wish to preserve their land but who also need income from the transaction. Although a landowner will receive more from a sale at fair market value than from a bargain sale, certain tax benefits can substantially reduce or eliminate the disparity.
Purchase at Fair Market Value
Purchasing land or conservation easements at fair market value is obviously an expensive acquisition method. However, if the land in question is important enough and the landowner has absolutely no philanthropic interest, there may be no other option for the land trust. Fortunately a number of approaches to funding the purchase exist.
- Private Donations. Individual people are the largest source of donations in America and are therefore critical to long-term conservation efforts. This cannot be over-stressed. Foundations and businesses are also sources of potentially substantial contributions.
- Government Grants. A variety of federal, state and local government agencies fund conservation projects. Land trusts sometimes qualify for these government funds. The Pennsylvania Department of Conservation and Natural Resources supports land trust acquisitions with
- Keystone Fund and Environmental Stewardship Fund (Growing Greener) grants, which support 50% of the costs of priority acquisitions. The Pennsylvania Bureau of Farmland Protection reimburses land trusts up to $5,000 for the costs of acquiring agricultural conservation easements. County and local governments vary widely in their commitment to conservation.
- A crisis situation may warrant a land trust buying a property using a loan to finance the purchase. Loans may be obtained from banks, individuals, foundations, other nonprofits or businesses. A loan may be available from the seller or adjacent landowners who would benefit from the transaction. The Conservation Fund and the Trust for Public Land have helped many communities across the United States with interim financing for their conservation projects.
- Trade Lands. Land that has no specific conservation value may still be donated to a land trust for its monetary value. The land trust can then sell the property to finance other land protection projects or possibly trade the land for conservation property.
Conservation organizations do not always have the resources on hand to conserve a highly desirable property. On the other hand, landowners are not always prepared to take an action that would permanently conserve their property. Several approaches exist for dealing with these types of situations.
- Installment Agreement. If the landowner is agreeable, the property could be purchased in an installment sale. The land trust could make payments over a period of time for a single land transaction or property interests could be conveyed in a series of purchases. [Learn more at http://conservationtools.org/guides/show/26]
- Purchase Option. A purchase option grants an exclusive right to purchase a particular property under certain terms and conditions by a certain date. Acquiring an option through sale or donation from a landowner gives a land trust time to raise funds for the ultimate purchase of the property without fear that the property will be sold to another bidder in the meantime. If the land trust fails to raise the necessary funds before the option expires, the land trust forfeits any money it paid for the option and the landowner is free to sell the property to another party. [Learn more at http://conservationtools.org/guides/show/27]
- Right of First Purchase. A right of first purchase is an agreement between a landowner and land trust that gives the organization the opportunity to match any legitimate purchase offer made on a property that is acceptable to the landowner. If the land trust does not match the offer within a specified period of time, the landowner may sell to the prospective purchaser. A right of first refusal places no obligation on the land trust to acquire the property and places no obligation on the landowner to sell the property. [Learn more at http://conservationtools.org/guides/show/24]
A land trust may be able to link a conservation buyer with a landowner who wants to sell a property having conservation values. The conservation buyer is someone who wishes to own a property but who also wishes to preserve the property’s natural values. To be effective in the long-term, the transaction should involve a conservation easement being transferred to the land trust. This method requires little or no financing by the land trust; obviously the trick is identifying interested conservation buyers.
Purchase and Resale
A land trust can purchase land and then resell the land subject to a conservation easement. The land trust can accomplish its conservation goal through the easement and also recover much of its expense associated with the original purchase.
Land trusts often acquire land in need of quick protection with the expectation of later selling it to a government agency for parkland, game land, forest or other open space purposes. This involves some risk, since the agency may—perhaps counter to earlier assurances—choose not to acquire the land from the conservation organization. However, this approach has many advantages. Unlike most government agencies, land trusts can usually move swiftly to complete critical land transactions. In some cases, a landowner may not be willing to deal with government but would be happy to work with a private nonprofit.
In a limited development project, a land trust acquires a piece of property and opens a portion of the property to development in order to help finance the original acquisition and the permanent protection of the remainder of the property. The conservation organization may simply subdivide the property into two parcels and sell one to a developer who will further subdivide, or the organization may take a more active role in the development of the property.
Limited development can be complex, time-consuming, controversial and financially risky. A land trust must be very cautious, well informed, and have good access to variety of experts in the real estate and development fields before taking on such a project.
Introduction to Conservation Easements
A conservation easement is an interest in real property established by mutual agreement of a landowner and a private land trust or government. It limits certain uses of the land for the purpose of achieving particular conservation objectives while keeping the land in the landowner’s control.
The easement continues in perpetuity, no matter the owner of the land.
The easement is tailored to the particular property and to the goals of the landowner and conservation organization. For example, an easement might allow sustainable forestry but restrict most other uses. Another easement might prohibit construction and logging within 100 feet of a stream but allow it elsewhere. Another might support farming but forbid development.
Most conservation easements are donated by landowners who wish to protect a beloved place. Under certain circumstances, easements are sold at a bargain price or fair market value. Donations and bargain sales that meet IRS requirements can result in federal tax benefits.
- Conservation Easement: A Property Rights Based Approach to Resource Protection
- The Nature of the Conservation Easement and the Document Granting It
- Model Grant of Conservation Easement
A Conservation Tool that Doesn’t Require Land Ownership or Control
The most distinguishing feature of the conservation easement as a conservation tool is that it enables users to achieve specific conservation objectives on the land while keeping the land in the ownership and control of landowners for uses consistent with the conservation objectives. For example: If a community seeks to ensure that no development will occur near a high quality stream known for its recreational and wildlife values and seeks to ensure that forestry is conducted sustainably and without damaging water supplies, conservation easements may achieve these goals with the landowners still able to generate timber and other revenue from the property. A conservation easement can complement private economic activities rather than preclude or severely hamper them. However, the agreements have their limits. For example, if the organization or government wants the ongoing ability to dictate to landowners how to manage their land beyond the restrictions typically set forth in a grant of conservation easement, then an easement may not be the best strategy for conservation.
An Interest in Real Property
To conserve the land, the owners and the “holder” (a nonprofit conservation organization or government) sign and record at the county recorder of deeds office a document that vests in the holder a real property interest in the area identified for protection. This property interest is quite narrow. The owners retain their rights to possess, control, and responsibly manage the land and to exclude trespassers. The holder is granted only the right to constrain the use of the land to the extent necessary to achieve the conservation purposes specifically agreed to by the owners. These purposes, also referred to as goals or objectives, are set forth in the document; so too are a set of restrictions and limitations identified by the owners and holder as being the agreed-upon means to achieve the identified objectives. The conservation objectives and restrictions established by the owners, as well as the rights that the owners grant to the holder to advance the objectives and enforce the restrictions, remain with the land, binding all future owners of the land.
Other Rights May be Granted
In some cases, owners may choose to grant the holder the right to remove invasive plant species, to plant native species, or even to establish a public trail or public access to a waterway. However, owners are not obligated to do so, and holders are not usually interested in seeking these additional rights.
A More Technical Description of a Conservation Easement
In legal terms, a conservation easement is a type of servitude. Servitudes allow people to create stable long-term arrangements involving land uses for a variety of purposes. The wider class of servitudes includes everything from a shared driveway arrangement between two neighbors to the complex structure of easements, restrictive covenants and affirmative covenants that will govern an entire planned community. A conservation servitude is simply a long-term arrangement to regulate land use for conservation purposes. It operates by vesting a power in a holder to constrain activities on the land in order to achieve conservation purposes.
Holders’ Rights Limited to Particular Purpose
There are two important differences between servitudes and other types of real estate interests. The first is that, as the name suggests, servitudes serve a purpose. The purpose is not only the reason for the arrangement, it sets the limits of the rights or powers vested in the holder of the servitude. In the case of a servitude granted to conserve land important to a waterway, the rights and powers vested in holder are not unlimited — they must be reasonably related to achieving that purpose. Both landowners and holder should strive not only to make the purposes of the riparian buffer protection agreement clear but also to create a set of restrictions that is demonstrably related to achieving that purpose.
Possession and Ownership Remain with Landowners
The second difference between servitudes and other types of real estate arrangements is that servitudes are “non-possessory,”which means that–unlike leases and other estates in land– all rights of ownership and possession remain with the landowners. Neither the holder nor anyone else has the right to exclude the landowners from using their entire property, including the riparian buffer area. Their use must be consistent with the conservation objectives of the conservation easement but they always remain in sole and absolute possession of their land. Landowners continue to have absolute control over who may enter the property and for what purpose. The conservation easement will ordinarily grant the holder the right to enter for purposes of monitoring compliance with, or remedying violations of, the conservation easement and no other purpose.
Some landowners may be willing to grant the holder a right of entry to study the land’s natural communities or to remove invasive species and plant native ones. Others may be willing to grant rights of public access on hiking trails or for other recreational purposes. (Particularly for a grant of public access, it is often better to establish the public access using a separate granting document.)
Vested Right in Holder
A servitude is not an agreement in the nature of a contract. The title of the document may use the word “agreement” (as in, for example, Riparian Buffer Protection Agreement) but, in order to achieve its objective of permanent protection, the content must create a servitude for conservation purposes on the land. The grant of a servitude permanently and unconditionally vests in the holder a right or power to use, or constrain the use of, land for a particular purpose. The process starts with a meeting of the minds between the granting landowners and the holder, but once the granting document is recorded, the conservation easement binds the land whether future owners agree with it or not. That does not mean that anything written in a recorded document is enforceable against future owners. A conservation easement, like other servitudes, is an extraordinary arrangement forever binding on people who never agreed to it. Care must be taken to keep the arrangement both reasonable and purpose-driven if it is to be enforced against future owners.
Conservation Easement Tax Benefits
There are two main kinds of federal tax benefits available to conservation donors: federal income tax benefits and federal estate tax benefits.
Federal Enhanced Tax Incentive
In 2006, Congress passed the Enhanced Easement Incentive Act, which increased the value of the tax deduction for many landowners — with great results. With the enhanced incentive in place, the pace of voluntary, private land conservation increased by roughly 33%, topping one million acres per year. However, Congress allowed the Enhanced Easement Incentive Act to expire at the end of 2014.
The enhanced incentive can make a big difference for landowners who are thinking about donating an easement. In particular, it allows working farmers and ranchers, as well as landowners with modest incomes, to realize more of the value of the deduction. Here’s what the enhanced incentive does:
- Raises the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%
- Allows qualified farmers and ranchers to deduct up to 100% of their AGI
- Increases the number of years over which a donor can take deductions from 6 to 16 years
Stronger incentives mean more voluntary land conservation, which is a cost-effective way to save farm and ranch land, healthy watersheds, wildlife habitat, scenic views, historic landmarks, urban green space, and parks and trails. There are many great reasons for members of Congress to support the enhanced incentive, but the most powerful are often stories from their own district. Help make the case to Congress.
Federal Estate Tax Benefits
Section 2055 of the Internal Revenue Code governs the charitable estate tax deduction. The requirements for the deduction and some of the issues that typically arise with charitable gifts at death are discussed here.
Pennsylvania Inheritance Tax
In Pennsylvania, death triggers a state inheritance tax on the distribution of the deceased person’s assets (called the “estate”) to the beneficiaries of the estate. Conservation restrictions on land included in the estate can reduce the inheritance tax owed.
Numerous studies document the benefits of conservation. The links below offer a collection of research, summarized with key findings, for convenient access and review:
State Funding Sources
- Keystone Recreation, Park & Conservation Fund
- Environmental Stewardship Fund (Growing Greener)
- Pennsylvania Agricultural Conservation Easement Purchase Program
For additional state funding sources, download Finding the Green: A Guide to State Funding Opportunities for Conservation, Recreation & Preservation Projects