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Domain name gifts: Dot-com boon for charities
By Jenn Abelson
Published: Thursday, March 30, 2006

BOSTON — When Tom Bird started receiving six-figure offers for his domain name, farm.com, the Massachusetts- based entrepreneur this month made an unlikely move: he donated the Internet address to the Boston Foundation.

In less than a week, the nonprofit group sold farm.com for $200,000. The buyer? The online pet supplies business Pets United, which already owned dog.com, fish.com, and horse.com.

"We've never dealt with anything like this before," said Ruben Orduna, vice president for development at the foundation. "We were scratching our heads trying to figure out if this was O.K. But it was surprisingly easy and a great gift."

Domain name donations are the latest twist in charitable giving, after nonprofit organizations and charities saw their coffers filled with stocks of soaring technology companies in the late 1990s. In the past few years, thousands of people have given domain names to charitable organizations, according to several major companies that buy and sell domain names.

But the Boston Foundation gift was unprecedented, they say, because the domain name was intended to be sold for cash, not to be used as an Internet site for the nonprofit group.

Domain names are issued for a fee by domain name registrars like Network Solutions on a first-come, first-served basis. No two can be exactly alike.

The domain name market boomed in the 1990s when speculators snatched up Web addresses with plans to sell them later for big money. The market for selling domain names fizzled after the dot-com bust.

But now the market is ripe again as people look to cash in on the huge growth in online advertising, snatching up domain names in some cases to be used as virtual billboards. In 2005, about 620 domain names sold for at least $10,000, double the sales in the same category the year before, according to DN Journal.com, which tracks domain name sales from companies and individual sellers.

For Bird and his business partner, Ken Saxon, good will isn't the only benefit from their farm.com gift.

Domain name donors can reap big tax deductions as if they were giving away cars or cash.

"It's the new era of investment, and people are looking for more ways to take advantage of tax credits and do something good," said Monte Cahn, chief executive of Moniker.com, which helps domain owners find buyers.

Several years ago, Cahn coordinated the donation of Holocaust.com to the Simon Wiesenthal Center, an international Jewish human rights organization - a gift valued at more than $1 million.

Bird and Saxon registered farm.com in the early 1990s for their Silicon Valley records and information management business.

They had named their company Farm, the campus nickname for Stanford University, where the two graduated from business school. The partners held on to the Internet address after they sold Farm in 1999.

As the domain name market rebounded, they began receiving unsolicited inquiries about selling farm.com, and last month Bird and Saxon took action.Rather than sell the name, they decided to transfer ownership of farm.com to the Boston Foundation and let the group reap the profit by selling it through a broker.

"It's a quirky example of being imaginative and creative with philanthropy," Bird said.

Roger Collins, chief executive of Afternic, the Florida-based company that brokered the sale of farm.com, said he expected Pets United to run an e-commerce Web site there.

Last year, Pets United paid more than $1 million for fish.com.

The burgeoning domain name market has created a field of appraisers who assess the value of Internet addresses as if they were real estate.

These appraisers give price estimates based on various factors, including comparable sales of similar domain names, length of the address and search value.

For domain name donors, these assessments can be used to calculate the tax deductions from their gifts.

Rob Grant, owner of a company in New York State that buys and sells domain names, will get a sizable tax break for the 107 educational domain names, like bestliberalartsschool.com and topamericanuniversity, that he recently bestowed on his alma mater, Prescott College in Arizona. The total appraisal: $99,040.

Prescott could benefit from the donation because people who type "best liberal arts schools" into a Web browser's address bar would eventually be directed to the school's Web site, Grant said.

"It's virtually impossible for these small colleges to compete with bigger schools with more money," he said. "The only way to leapfrog over them is to be very creative with marketing."

Last year, Rogers Cadenhead, who snapped up benedictxvi.com several weeks before the name was chosen by Pope Benedict XVI, debated what to do with the coveted site as similar domains fetched thousands of dollars.

He initially offered the name to the Vatican in exchange for a two-night stay at the Vatican hotel.

Ultimately, he decided to avoid offending his Roman Catholic grandmother and donated the domain to Modest Needs, a nonprofit group that helps people with short-term emergencies.

Modest Needs said donations quadrupled shortly after the group received the domain name.

"My only regret is that I never heard from the Vatican," Cadenhead said.

 




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