Proud Alumna or Alumnus? Explore Strategies for Giving Back - Butler Financial, LTD


Proud Alumna or Alumnus? Explore Strategies for Giving Back

There are many ways to support an alma mater – donating QCDs, giving appreciated stock or founding a scholarship are just a few approaches.

The dorms. The quad. The professor who inspired you.

For many, college is a formative experience along the path to success – and alumni have been giving back in a big way.

For some time now, alumni have been the largest or second-largest source of monetary support to higher education institutions in the U.S. Between 1988 and 2018, for instance, alumni support grew 495%. In 2016 alone, colleges and universities saw $6.2 billion in “mega-donations” – 194 of them were worth more than $10 million.

While these big dollar donations are impressive, you don’t have to be a millionaire to give back in a meaningful way. There are several other avenues to making a lasting impact.

Alumni donated $12.15 billion to higher education in 2018

Time and treasure

Recent graduates may not have the financial means yet, but they can serve in a consulting or mentor role or on a board of some sort. They could interview prospective students, lead campus tours or staff recruiting events.

Those further along in their careers may prefer to make alumni giving part of their focused philanthropic efforts, donating cash or appreciated investments (even real estate, art or jewelry). The latter allows you to avoid paying capital gains taxes in addition to benefiting the institution of your choosing.

Tip: Target your donation to a specific program or area of research that aligns with your values and your intention for your legacy.

Another option? The QCD. If you’re over 70 1/2, you can direct your IRA to distribute up to $100,000 in required minimum distributions (RMDs) directly to your alma mater in what’s known as a qualified charitable distribution (QCD). You won’t be taxed on the transfer, and you exclude that money from your taxable income for the year.

Planned gifts

Say you have concerns about giving away money you may need down the line. That’s where a charitable remainder trust (CRT) could help. This estate planning vehicle provides steady income during your lifetime, while the principal remains reserved for a qualified public charity after you pass away.

Another planned-giving option is to purchase a charitable gift annuity from your favored institution. Similar to other annuities, you contribute a lump sum and get a regular fixed payment for the rest of your life. And, you can fund these vehicles with appreciated stock, if you prefer. Planned gifts can also involve naming the university as a beneficiary of your estate, a donor advised fund or an insurance policy.

Thinking bigger

For a personal connection, consider founding a scholarship. The university will draw up a contract that outlines your commitment and the selection criteria. It’s more complicated if you want to establish the scholarship on your own. To do that, you’ll need a trust document stating the criteria for eligibility and selection, the duration of the award and conditions for renewal.

Of course, your favorite university may offer an opportunity to put your name on a building at some point. If you have the means, be sure to talk to your family and professional advisors about undertaking a responsibility of this magnitude. These types of gifts require negotiations and can be time-consuming to structure. As with all these options, you’ll want to welcome professional guidance.

Sources:; Council for Advancement and Support of Education; Hanover Research;

Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

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