MSU President's Column for Traill County Tribune
December 7, 2013
Amazing stewardship opportunities available for charitable donors
The holiday season is a time for giving, and a time for being thankful. At Mayville State, we are very fortunate to benefit from the generosity of so many alumni and friends. Many of these benefactors are individuals who are grateful for what they have received from Mayville State and are helping to provide financial assistance so that others may also enjoy the benefits of a Mayville State education. Others are thankful for the fact that Mayville State plays an important part in our community, and they want to help ensure that this will continue. Whatever the reason for their gifts, these people are truly making a difference in the lives of others.
Especially as the end of the year approaches, we think about the many opportunities that are helping to provide great benefits to our donors who so generously are supporting us. Many of these benefits can make the impact of the gift extend well beyond the actual cash amount expended by the donor.
The 63rd North Dakota Legislative Assembly has created an amazing new program to spur philanthropic giving to North Dakota’s state universities and enhance academic excellence. The new program and funding, called “The Matching Fund for Enhanced Academics,” is providing a 50% match for each and every dollar donated to endowments and non-athletic scholarships through the Mayville State University Foundation between July 1, 2013 and December 31, 2014. Every dollar given, up to $1,333,333, will receive a 50% match, creating the potential for $2,000,000 in new endowment funding. This could allow for 60 or more new academic scholarship per year. Contributors can also make a pledge of up to seven years and have the entire pledge amount matched.
This is the last year that a donor can make a charitable gift from an IRA (up to $100,000 for anyone 70 ½ years old or more). The gift is tax-free.
Through the North Dakota endowment Tax Credit, donors who make gifts of $5,000 or more in a year to an endowment get a 40% tax credit on state income tax. They also qualify for a federal deduction. This makes the average $5,000 gift cost about $1,600. (Donors interested in this should always consult with their financial advisors to see how it would work for their personal situation.)
So, if a person were to take advantage of all of the programs available, the scenario could look something like this:
Joe and Margaret Smith love Mayville State University. They want to establish an academic scholarship endowment at the university. They know that a scholarship endowment must reach a funding level of $15,000 before it is eligible to begin producing scholarship funding. They also want to get the North Dakota endowment credit and take advantage of the 50% matching funds from the North Dakota Matching Fund. If they can, they’d like to benefit from the IRA charitable gift benefit that runs out on December 31, 2013.
They check with their tax advisor and find out they can take $10,000 from the IRA. Then they place the money into the Joe and Margaret Smith annual scholarship endowment through the MSU Foundation. The public private match comes into play, and provides a 50% match of their gift, $5,000. This match also flows into their endowment and the endowment is now fully funded!
In addition, the North Dakota Endowment Credit may give them up to $4,000 back in state income tax credit, thus reducing the cost of their gift to $6,000. If they can’t use the whole credit this year, they can carry that over for up to five more years.
Their net gift cost $6,000 and funded a $15,000 scholarship endowment. This endowment will now generate a scholarship in their name every year, forever, to help a student. This is both a legacy and amazing stewardship.
The end of the year is quickly approaching. If you would like to see how these various programs might work for you, I encourage you to contact your personal financial advisor, as well as John Klocke, our development director, to help you navigate these great gift opportunities that can stretch your charitable gift dollar. John can be reached at 701-788-4787.