Would you donate your yacht to charity? Charlotte Hogarth-Jones explains how it can be done – and why it’s worth doing.
When Nicolas Cantenot bought the beautiful 1948 wooden sailing yacht Margilic, he had grand plans for her. Together with four friends, the owner and co-founder of design firm Merveille Yachting had purchased the historic boat with a view to a packed regatta calendar.
“I was the youngest and the idea was that the others would work a little less than me, and sail her a lot more than I could,” he explains. “But actually the reverse happened. I was the one really managing the boat and I had no time to race her at all… meanwhile they all still had very busy schedules.
“We could have lived with her for a while,” he adds, “but we just thought, isn’t it a waste to have such a beautiful boat not out on the sea? From the beginning we always knew we’d just be one page in this boat’s history, and we had a mission to keep her at her best. We explored the possibility of selling her, but we realised it would take time and be stressful, so we all said, ‘Why the hell would we do that? We’d be better off giving her away.’ Once we came to that conclusion, it was easy.”
Cantenot is one of a growing number of yacht owners who are donating their boats to charity. Sound crazy? It may well do – but those who’ve been through the process claim significant benefits, from major tax breaks through to swift, painless transactions, not to mention the satisfaction of giving a worthy organisation a leg up.
Jorge Mahauad-Wittmer is the marine programme manager at AMIkids (Associated Marine Institutes), a large-scale non-profit in the US that operates across nine states, runs 49 concurrent programmes [at the time of going to print], and manages a $72 million annual budget. The organisation launched in 1969, when Fort Lauderdale judge Frank Orlando tired of seeing the same kids kicking around. Unoccupied and with little to motivate them, they often fell foul of the law, so he asked his friend Bob Rosof of the Florida Atlantic Ocean Science Institute to find something productive in the marine world to keep them occupied.
Today, the organisation is huge, and hugely successful. Many children are referred to them via the federal system and upwards of 70 per cent of those who’ve attended their courses – which include counselling for addiction issues, field trips on yachts and inland, and training to help them find skilled jobs in the wider workforce – don’t reoffend within a year. AMIkids accepts around 20 yacht donations a year, with an average length of around 20 metres – its largest so far is a 40-metre Benetti – and has around 45 yachts for sale at any one time.
“When I first started working here I was like, ‘People give you millions of dollars’ worth of yachts? What? Why?’” Mahauad-Wittmer laughs. “The number-one reason is always convenience.”
Owners keen to move onto a new boat often don’t want to wait out the two- to three-year period before a buyer is found, and they don’t want to own two boats at the same time either. Ninety per cent of the yachts donated come to AMIkids via brokers – who are compensated for their work – and many of the boats may have already had a slow stint on the market prior.
The perfect yacht, he explains, is often something that’s been highly customised. “We had this sportfish aficionado living here who is into old, wooden sportfish vessels,” he explains. “He had this Rybovich boat that he’d put six to seven million dollars into, but now you have this boat that’s essentially a museum artefact, which is very hard to sell. There are maybe three or four people in this country who’d want something like that.”
Once yachts are donated, the charity invests 10 per cent of what it estimates the boat will lease for into an improvement process. More than simply new carpets or interior tweaks, this needs to be something that materially improves the value of the boat. After that, the yacht is more marketable, and the charity makes moves for a speedy sale.
“We’re not in the business of owning boats, we’re in the business of helping kids,” explains Mahauad-Wittmer. “so we’re not going to wait two years to get rid of a boat. We price the boats with the market, and we price to lease. The lease itself is the great way for owners to have the use of the boat with interest-free financing and without a lot of liability.”
Donors have access to a potential tax benefit (in the US) by divesting the costs and not going through the sale cycle. Buyers technically lease the yacht for three years – at the end they can choose whether they keep it and pay the remaining balance, or return it. Almost everyone keeps the yacht, he says – a few even buy it, then donate it right back to complete the cycle.
How it works: the AMIkids leasing model
1. Agreement to enter into lease
- This document differs from the standard brokerage Purchase & Sale Agreement. A 10 per cent deposit is required and funds are held in escrow with the broker. The Lessee conducts their own due diligence survey.
2. Acceptance of vessel
- AMIkids utilises a Standard Lease with Option to Purchase. The lease term is three years, and the charity holds the title to the yacht during the lease term. This operating lessee has an option to purchase the yacht at the end of the lease term. At any time during the agreement, the lessee can terminate the lease by returning the yacht to the charity.
- Insurance must show AMIkids as the loss payee and additional named insured.
- Vessel name can be changed, as well as the hailing port.
- Upon executing the lease document, 35 per cent of the total amount (less 10 per cent held in escrow) is payable to AMIkids.
4. Monthly payments
- During the Terms of the Lease, the lessee will make 36 interest-free monthly payments, equal to one per cent of the total lease amount to AMIkids. This represents 36 per cent of the total lease price.
5. Purchase options
- After the 36th payment, the Lessee will have the option to purchase the vessel by paying the remaining 29 per cent of the total amount.
Some owners are multiple donors – for example, the charity received the 28-metre cold-moulded sloop Sonny, custom-built in Maine by Brooklin Boat Yard, from an owner who had previously given them a small sailing boat, a Whitby 45, in the 1970s, and a 21-metre in 2019, just as Sonny was coming out of the yard. It’s a common route – donating to make way for a new yacht. The owner of a 2007 Moonen, for example, had a larger Moonen on order. “He loves his environment and he loves his crew, so when the new boat was ready he just donated the old one and moved all his personal property across. He didn’t have to go through this awkward phase of two crews, extra expenses… it was just gone like that,” explains Mahauad-Wittmer.
Tenders and support vessels also fit the process well. “We once had a tender for a 61-metre yacht that was going north to the Arctic, and this thing just wasn’t going to work up there,” he explains. “Instead of the captain having one more thing to deal with, they just donated it.”
Tony Gilbert, programme director of the International SeaKeepers Society, an organisation that majors in citizen science and ocean conservation, runs pretty much the same model. “There are two sides to SeaKeepers,” he explains, “and this is the one that keeps the lights on.” It’s not that common, he acknowledges, to find owners who are able to move from one yacht to the next without selling the first to fund the second, but there are enough of them out there. “We’ve been going strong with this as our business model for decades,” he says.
On average, SeaKeepers accepts around 10 yachts a year, and yacht buyers loan the boat from the charity for the first three years of ownership in what they call a “bareboat charter”. “They can take it wherever they want, for as long as they want,” he explains, “the only difference is that we retain the title – we transfer it to them at the end of the three years when they’ve paid whatever is left over of the negotiated sale price.”
At the end of the process, owners are encouraged to engage with ongoing missions, such as beach clean-ups and accommodating scientists on board to carry out much-needed research. Those who do so join the likes of 67.8-metre Archimedes and 44.8-metre Dorothea III, although it isn’t by any means compulsory.
From an owner’s perspective, Cantenot and his friends – who donated Margilic to a French charity called Pilotine that helps adults with drug and alcohol addictions – found the process straightforward. Donating the yacht took around six months, but the length of time was largely due to the fact that, under French law, a gift cannot be made from one company to another. The syndicate had to close and de-list the group company that owned her, and transfer the boat to her actual shareholders, so that they could then donate the yacht as individuals.
“For tax reasons, we had to prepare a kind of file for the customs office that was a bit more complex than a normal sales system,” Cantenot explains. “We went through lawyers who helped prepare a document package for the customs office, and also a document for the charity showing that this was a gift, and not something they had inherited. It was important to make it straight under the French law, but once we found the right lawyer it was very simple and fast.”
In his case, the syndicate agreed that the gift was totally unconditional. “We didn’t want to have any conditions about using her or sailing her,” he explains. “Having said that, they have proposed that we come over, see her, maybe be part of a crew for a couple of days… we haven’t done that so far but I’m sure we will – though I’ll never ask to be invited.”
Charities like SeaKeepers and AMIkids accept boats of all flags from all over the world, but if you’re thinking of seeking out a charity closer to home, or one that supports a cause that resonates with you specifically, then lawyer Will MacLachlan, partner at international law firm HFW, advises a thorough understanding of the rules and regulations in the jurisdiction where you’re going to make the gift.
“I would approach it very much as though my client was coming to me and saying, ‘I want to do a normal, arm’s-length sale.’” he explains. “That means making sure that the terms of the transfer are appropriately documented, that we take advice in the local jurisdiction on charitable arrangements, and I’d want to be comfortable that all fiscal elements like VAT were appropriately addressed. It is important that both parties are happy with the arrangements and, most of all, that the seller has a clean break (i.e. gifts the yacht without any ongoing liability), and the charity receives a good and marketable title to the yacht and is comfortable with what it is taking on.”
MacLachlan emphasised the need to ensure that any gift be concluded as though it were a normal transaction and that nothing should be done or omitted that might leave it open to challenge. For example, it would be good practice to ensure that the charity gives valid, even if only nominal, consideration for the yacht.
Though the process can be smooth, you shouldn’t expect dramatically lower legal fees, he says. “You might have a simplified documentary process, but there is likely still to be a sales agreement to be drafted and/or negotiated.” In some cases, he suggests, unless a charity specifically wants a yacht, it might be simpler and better for the charity if an owner were to sell the yacht themselves and gift the proceeds of sale to them. Many organisations will be ill-equipped to own and operate a yacht, and unless set up specifically to provide a path for the charitable gifting of a yacht, or otherwise to operate a yacht in the pursuance of their charitable aims, the ownership and operation of it is likely to fall outside most charity’s objectives and present a headache for the trustees and management.
This is something Cantenot came up against. “I’m not going to tell you we had 10 choices, we asked charities to pitch and then we all chose… that’s not at all what happened,” he says. “And given that this charity [Pilotine] is not as established as the one we approached initially, there is a risk that at one point in time they might not have enough people or skills to maintain the boat… but nothing is perfect, so we had to just take the risk and hope it would never become a problem.”
AMIkids don’t accept “project boats”, says Mahauad-Wittmer. “One of these boats can really sink our budget, so we’re very risk averse and strategic when it comes to what we accept.” It has also rejected some boats because they are too large or too far away. “We rejected a 75-metre boat in Kuala Lumpur,” he recalls. “We thought about it but the holding cost, finding suppliers, doing the material improvements, travelling across the globe…” For that particular boat, in that condition, it wasn’t worthwhile.
SeaKeepers has accepted “everything under the sun”, and Gilbert explains that “there’s a market for everyone”. Would they take, say, a 125-metre superyacht? I ask. “Absolutely,” he says. “At least, we’ll always try to find a way.”
Like buying your first superyacht, it seems, donation is all about finding the right match. When it works, the benefits for both owner and charity are well worthwhile – but the real story here is the knock-on effect that those at the end of the chain receive.
“What we do is we get these hardened kids, who have had a really rough lot in life, take them out of their comfort zone and let them become kids again,” says Mahauad-Wittmer. “When they’re kids again, they become open and vulnerable, and then we can reach them in a way that no one else can.”
There can be no better case in point of a donation programme working than a former AMIkids graduate who used his experience to set up a yard called Nordin Custom Boats. Some years later, as the yard grew and grew, the charity was amazed to receive a donation from a well-meaning captain – a Nordin 42.
Cantenot’s donation, which will be used by the programme rather than sold, was received with great fanfare. Pilotine organised a gift to say thank you, which was presented to him in front of Marseille City Hall with the mayor in attendance. For Cantenot and his friends, however, the ceremony wasn’t necessary. “For us, the sense of satisfaction is to think that this boat will be sailed. She will be at sea, with sailors, hopefully every week, and that’s what a boat is made for.” Like all owners, he knows the joy of spending time at sea. Surely, sharing that can be no bad thing.
The International SeaKeepers Society’s key mission is to facilitate marine research and conservation, educate the youth of today and bring a general awareness of ecological issues, with the hope that science and education will help to “protect and restore our precious blue planet”. Their yacht donation programme helps to fund valuable work, and owners also volunteer their yachts to be used for scientific research trips, similar to BOAT International’s Yachts for Science scheme.
Examples of its work include a trip to research juvenile white sharks with an entire lab of staff and graduate students on board the 19-metre Discovery yacht Valkyrie; a trip to deploy 38 ocean sensor buoys across the Atlantic to harvest data, on board 85-metre Vibrant Curiosity; and a 10-day exhibition to observe whale acoustics in south-east Alaska, where many of the sounds and behaviours observed and recorded were so novel that it led the researchers to believe these vocalizations and behaviours were signature to this one group of whales, furthering the theory that different whale pods develop their own “culture”, much like the different cultures that exist with humans. In January, the organisation also launched a “floating classroom” for children from Project T.H.U.G, a non-profit devoted to supporting adolescent black males in 8th and 11th grades. The programme taught them about the local marine environment; for many of them it was their first time on board a boat. seakeepers.org
First published in the June 2022 issue of BOAT International. Get this magazine sent straight to your door, or subscribe and never miss an issue.Shop Now