Donations to Triangle universities are healthy as the tax year ends

jprice@newsobserver.comDecember 26, 2012 

Cuts to tax deductions for charitable giving – on the table during negotiations about the so-called fiscal cliff – are worrying local university officials, but they’re thinking about the long term.

For now, the three major universities at the points of the Triangle are savoring a champagne year for charitable contributions.

“The short answer is that the year is going very well,” said Robert Shepard, vice president for alumni affairs and development at Duke University.

The longer answer, he said, has more to do with Duke’s having started a major fund drive this year than with any rush by donors to avoid a potential loss of tax benefits.

Duke has been encouraging donors to consider pre-paying installments of multiyear gifts to dodge any effects. In some cases, donors had done just that.

But any rise in gifts for that reason has been counterbalanced by potential donors who react to uncertainty over tax rates and deductions by simply not acting, whether or not that’s logical in their case.

If the negotiations in Washington lead to changes such as smaller tax deductions for gifts, the development could clearly cut into gifts to universities, Shepard said.

Shepard said he’s in an informal working group with his counterparts at Columbia, Cornell, Stanford, Penn and Johns Hopkins universities, and they check in with each other to talk about issues like the fiscal cliff.

All are seeing the same effects, with no particular uptick.

Spokesmen for the development offices at UNC-Chapel Hill and N.C. State University gave similar reports.

The lack of clarity on what will happen with taxes has of course prompted worried phone calls to financial advisers all over the country.

Tom Struckmeyer, a financial advisor in the Hillsborough office of Edward Jones, said regardless of the uproar in Washington, someone who wants to donate to a university should still do it as long as it fits their long-term goals. When pondering a large donation, donors should consult not only financial advisers, but also legal and tax experts, to ensure that the gift is consistent with those goals.

Making a decision based on a guess about what direction the government will take, though, is a bad idea, he said.

Struckmeyer has been cautioning clients not to overreact to the speculation and political turmoil. Instead, he said, investors should calmly evaluate the quality of their holdings and make sure their portfolios are diversified in order to weather whatever comes.

“You have to keep your long-term goals in mind, and just have to evaluate whatever comes, and adjust to it,” he said.

In the long term, cuts in the tax benefits for charitable giving could have a major impact on donations generally, not just to higher education.

A cap of $50,000 for charitable tax deductions would slash giving by about $150 billion over 10 years, according to the National Economic Council, which advises the White House on economic matters. A cap of $25,000 would cut it by $200 billion.

That impact would be felt most by universities and colleges, as donations to educational institutions represent by far the largest single category of recipients of charitable gifts. These donations amounted to some $42 billion in 2005, the most recent year for which such data are available.

That’s double the amount received by the second-ranked category, arts and cultural institutions.

For now, though, the numbers show that uncertainty hasn’t hurt the situation for local universities.

As of last week, Duke’s receipts from gifts were up 3 percent, at about $140 million for the calendar year, though university officials expected that number to jump as people slipped pledge payments in under the wire before the new tax year begins Tuesday.

And thanks to that $3.25 billion, multiyear drive that’s under way, new commitments to the university have increased about 43 percent, to $306 million.

UNC-CH had a big year in fiscal 2012, and earlier this month was within a whisker of matching the amount it had raised by this point last year, just over $100.3 million, said Scott Ragland, a spokesman for the development office there. The fiscal year begins July 1.

“We did really well last year, so we’re pretty happy,” he said.

Some of the best news, though, has been at NCSU, where Chancellor Randy Woodson made it a priority from the first day of his arrival in 2010 to build the university’s endowment to help compensate for repeated cuts in the state allocation to the UNC system.

From July 1 to early December, the university pulled in $69.7 million in gifts and new commitments, up from $46.9 million in about the same period in the last fiscal year, said Stephen Watt, the interim associate vice-chancellor of university development.

NCSU donations had long lagged those of UNC-CH, but there are other signs that it’s beginning to make up ground: The annual giving program alone had a 34.5 percent increase in fiscal 2012, and added 3,000 new annual donors.

Price: 919-829-4526

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service