MSU President's Column for Traill County Tribune
November 26, 2016
Amazing year-end 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 Mayville State. Many of these benefits can make the impact of the gift extend well beyond the actual cash amount expended by the donor.
The 64th North Dakota Legislative Assembly created an amazing program to spur philanthropic giving to North Dakota’s state universities and enhance academic excellence. The program and funding, called “The Matching Fund for Enhanced Academics,” is providing a 50% match for each and every dollar donated to endowments and annual scholarships through the Mayville State University Foundation. Every dollar given will receive a 50% match, creating the potential for $2,000,000 in new endowment and annual scholarship funding. This could allow for 100 or more new academic scholarships per year. Contributors can also make a pledge of up to seven years and have the entire pledge amount matched. Gifts must be made before Dec. 31 to be submitted for match for as long as funds exist. This match program ends for good on that date.
The North Dakota endowment tax credit adds yet another benefit to donors who make gifts of $5,000 or more in a year to an MSU endowment. They will receive a 40% tax credit for the gift amount on their state income tax. They also qualify for a federal deduction. This makes the average $5,000 gift cost about $1,250. (This scenario assumes the donor is in the 35% tax bracket. Donors interested in this should always consult with their financial advisors first to see how it would work for their personal situation.) Donors do not need to itemize to take advantage of the credit.
So, if a person were to take advantage of all 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.
They check with their tax advisor and find out they can make a gift of $10,000 and place the money into the Joe and Margaret Smith annual scholarship endowment through the MSU Foundation. The public private match then comes into play, and provides 50% match of their gift adding $5,000 to their $10,000. This match also flows into their endowment and the endowment is now fully funded!
In addition, the North Dakota endowment credit will give them $4,000 back in state income tax credit, thus reducing the cost of their gift to $6,000. And further, because they can also gain a federal tax deduction of $3,500 for their gift (at the 35% tax bracket). If they can’t use the whole credit this year, they can carry it over for up to three more years.
Joe and Margaret’s net gift cost is $3,500 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.
We’ve also had supporters create retirement income charitable gift annuities that gave them an annual guaranteed income for two lives retirement income payment of 6-8% of their gift amount, based on age, and a huge tax deduction and qualified for the 50% match. For these donors it was a lot better than the small returns available on their certificate of deposit.
One other enhancement to the N.D. Challenge Fund is available to any person who is leaving a gift in their will or estate plan or other asset to an MSU endowment. These folks can receive a 50% match this year on the entire amount of the gift in their will or estate and start their endowment today.
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, the executive director of the MSU Foundation, to help you navigate these great gift opportunities that can stretch your charitable gift dollar. John can be reached at 701-788-4787 or email@example.com.