By most standards, 2020 was not a “good year.” But in the world of wine, an idea was bubbling up that may bear philanthropic fruit in the years to come.
Garth Hodgdon has worked as a sommelier in some of the country’s finest restaurants: Bouchon and the French Laundry in Napa, Per Se in New York City. As a brand ambassador for Krug Champagne, he traveled the country hosting dinners and other events that brought together great wines and connoisseurs.
In 2018, one of Hodgdon’s now colleagues attended a dinner where a high-profile wine collector mentioned that he had several hundred thousand bottles in his cellar with no real plan for what to do with them at the end of his life. “This collector said, ‘Wouldn’t it be great if there was an opportunity to turn this collection of wine I’ve amassed into something much greater by donating it to charities?’”
The idea stuck with Hodgdon — and he shared it with others. “Everybody was sort of blown away,” he says. “It wasn’t something that anyone was really doing.”
He started to form the nonprofit Legacy Cellar Foundation in 2019. But the effort really got off the ground when the coronavirus hit and Hodgdon felt a strong desire to do something to help.
From Wine Cellar to a DAF
Some oenophiles have been building their collections for decades — in some cases, more bottles than they know what to do with, Hodgdon says. “I’ve been in many, many cellars over the years where there’s 10, 20, 30 times the amount of wine that people could drink in their lifetime, even if they had help every single day.”
While many wine collectors aren’t looking to liquidate their cellars just to put more money in their bank accounts, it often takes a long time for them to wrap their mind around the idea of donating, he says. “They’ve been collecting wine because it’s a passion — it’s something that they really care about.”
Collectors often say they want to see their wines go to people who will cherish them as much as they do. Hodgdon says he can help them achieve that goal — plus do some additional good for the world.
Here’s how it works: When collectors decide they want to donate, they sign a one-page contract stating their intention to give wine to the Legacy Cellar Foundation and its donor-advised fund. Hodgdon then compiles a cellar inventory and brings in a third-party appraiser to estimate the wine’s value.
“We really want to make sure that that part of the process is fair and independent because it matters to the collector and it matters to the charity in the end,” he says.
After that, the Legacy Cellar Foundation takes possession of the wine and finds the best way to liquidate it — either through auction or direct sales to other collectors.
Once those sales go through, the proceeds go into the foundation’s DAF. The donor indicates which charity or charities should receive the gift, and the foundation transfers the funds in the donor’s name. Donors can also sign a bequest agreement, committing to leave their wine to the Legacy Cellar Foundation to liquidate for their desired charity after they die.
So far, Hodgdon has helped roughly a dozen collectors make significant donations of wine, and a few more conversations are in the works.
Any wine collector could take their cellar to an auction house, sell the wine, and then donate the proceeds to charity. But auction houses often take a percentage of the lot.
What makes the Legacy Cellar Foundation unique is its commitment to donate all of the cellar value to charity. The foundation is supported by private donors and doesn’t take a cut of the proceeds from sales of wine. It’s a win-win situation, he says. Auctions and other wine lovers get access to wines that they otherwise wouldn’t. And having the nonprofit handle the sale saves collectors hassle while maximizing the value of their wines.
The idea of donating a wine cellar has been appealing for donors without much cash flow, Hodgdon says. “The opportunity to take something that they already had in their possession and turn it into cash was a real eye opener,” he says. “This gives them the opportunity to reach their giving goals without necessarily using cash.”
A Story for Each Bottle
Hodgdon connected with the first Legacy Cellar Foundation donor through a friend who is a wealth planner. She made the introduction to the collector — a former wine importer and distributor — and Hodgdon went out to meet him and tour his cellar.
“We talked about some of our mutual goals, what I was trying to do with the Legacy Cellar, and some of his philanthropic goals and ideas,” Hodgdon said. “He was very, very excited about donating.”
As they walked through the cellar, the collector grabbed some of the gems from his shelf. Wines from the Rhone Valley in France, Champagne, and Bordeaux. German Rieslings. Large-format wine bottles, some of which can hold nine liters, the equivalent of 12 standard bottles. “He had a story for each one of them: where he got it or how long he’s had it or who he bought it from,” Hodgdon says.
That day they compiled a list of the bottles he wanted to donate, with the proceeds going to World Central Kitchen, the charity founded by chef and humanitarian José Andrés.
“Every time we grabbed another bottle, we were like, ‘This is going to feed more people,’” Hodgdon says. “You could almost feel the good being amplified a little bit more.”
The lot generated more than $500,000 for World Central Kitchen.
Appreciated Value
Currently, the Legacy Cellar Foundation’s donor-advised fund is not invested in the stock market. The goal is to get the money out the door as soon as possible after the wine has been sold, Hodgdon says.
Some people opt to contribute a portion of their cellar now and a portion later. In those cases, the collector holds onto the bottles to sell at a later date. “Wine appreciates just as well as an investment may, and sometimes more,” Hodgdon says.
Hodgdon recently moved to Napa to be near the concentration of impressive wine cellars in Northern California. But serious collectors are everywhere, and he hopes potential donors are all across the country.
“A lot of times people think that wine is specific to a region or a type of person, and that’s not the case,” he says. “There’s a lot of money in wine and a lot of money in wine cellars, and it can do a lot of good in the world.”
