Holding off more McMansions: Charles Schoendorf, Peter Tombros and D. Seeley Hubbard by the salt marsh they helped preserve.

At low tide Farm Creek, a tidal estuary in Norwalk, Conn. feeding into the Long Island Sound, looks like mud. But the salt marsh nurses oysters, mussels, clams, snowy egrets and ospreys.

For a time it looked as if a trio of multimillion-dollar McMansions would call it home, too. But that development was blocked when neighbors resolved to buy a $4 million 2.2-acre parcel and make it part of a continuous 16-acre nature preserve. They're doing it through the Norwalk Land Trust, using contributions, mostly from nearby, plus tax breaks, state and city grants and the volunteer labor of builders, Boy Scouts and suburban moms.

With financially stressed governments slashing funding for land acquisition, citizens who want to preserve open space are finding they have to do it themselves. The Land Trust Alliance counts more than 1,700 land trusts nationwide, up from 1,200 in 2000. A few are big players, like the Nature Conservancy (which protects 119 million acres from development) and the Trust for Public Land, which just saved the 138-acre Cahuenga Peak and its famous Hollywood sign with a last-minute $900,000 gift from Hugh Hefner toward the $12.5 million cost. But most are small groups working to save small sites that matter to a collection of neighbors, says Story Clark, author of A Field Guide to Conservation Finance.

A charitable land trust can own property and/or hold conservation easements, which are promises by landowners not to develop their parcels. When those easements create a reduction in market value they are good for federal (and sometimes state) income tax deductions. In 2006 Congress temporarily expanded that break, allowing easement donations to wipe out up to 50% of a taxpayer's adjusted gross income (100% for farmers) and any unused portion to be carried forward and applied against AGI for up to 15 years. (There's a 30% of AGI deduction limit and a five-year carryforward in the permanent law.)

Local trusts now control easements on 6.2 million acres and own 1.7 million acres outright, up from 2.6 million acres in easements and 1.25 million acres owned in 2000. The burgeoning easement donations have drawn scrutiny from the Internal Revenue Service, which suspects some landowners are taking inflated deductions with the help of chums running the trusts. But Congress seems likely to retroactively renew the expanded tax break, which expired at the end of 2009.

In contrast to the Nature Conservancy, which puts protection of ecosystems first (and even limits access to some of its lands), the small trusts promote utility. Willistown Conservation Trust near Philadelphia is about to complete the $3.9 million purchase of 50 acres of meadow that includes a 6-acre farm where 100 families share the harvest. The Land Trust for the Mississippi Coastal Plain just dedicated a boardwalk on the 29-acre freshwater wetlands dubbed the Lucedale Depot Creek Greenway and is raising funds for an educational building there.

The Norwalk Farm Creek project shows some imagination in the financing. As is typical, the effort was reactionary--after landowner Edward Hart Jr. died in 2006 his waterfront plot went up for auction. On one side of the land sits a sliver of existing nature preserve. On the other is a 10-acre peninsula the Harts sold to the city of Norwalk for $300,000 in 1983 after their castle-like stone mansion burned down and (lacking insurance) they needed cash to build a new wood-sided house.

The city was in no financial position to buy the remaining land. As a holding action, Charles Schoendorf, an insurance broker whose house is a quarter of a mile away, bought the plot for $4 million and agreed to pay the mortgage and the $40,000 annual property taxes while the Norwalk Land Trust, with an operating budget of only $19,000 a year, raised cash to buy him out.

Peter Scull, a retired Time Inc. ad executive, and his wife, Linda, helped organize the Campaign for Farm Creek Preserve at a meeting on their terrace overlooking the creek. The committee, which at various points included a Realtor, a fireman, a retired GE Capital event planner, a former TV producer and a retired IBM manager, met with a professional fundraiser from the Trust for Public Land. She told them they needed to demonstrate broad local support before they could solicit bigger bucks. Boy Scouts cleared trails on the land, mothers organized nature walks and kids collected quarters at lemonade stands. Two contractors volunteered to raze the Hart house and repair a stone carriage house (circa 1907) that remained from before the fire. "It caught the imagination of the community," says lawyer D. Seeley Hubbard, who is president of the land trust and drafted legal documents for the deal pro bono.

Eventually the trust wangled a $40,000 grant from Newman's Own Foundation, a $500,000 grant from the state Department of Environmental Protection and $250,000 from a taxing district covering the part of Norwalk where the preserve would be. That led in 2008 to a $500,000 donation from biotech executive Peter Tombros and his wife, Ann, who have a second home in Rowayton. "Something this substantial that involved that many people really talked to us," he says. The couple has given millions to their Penn State alma mater but had never made such a large donation locally. They set up their gift as a match: They gave $2 for every $1 others contributed. Out of Rowayton's 1,500 households, more than 600 have donated so far.

While all this was going on, insurance man Schoendorf was straining under the carrying costs. So once the land trust had raised $2 million he sold the property for $4 million, with the trust taking a $2 million low-interest loan from the nonprofit Conservation Fund in Arlington, Va. By that time the plot was appraised at $4.4 million, and Schoendorf got to claim a $400,000 charitable tax deduction for his bargain sale to the land trust. As of late May $128,000 of the loan remains to be paid off.