Forever Valpo Fundraising Campaign

[crusadermoe]

I think the new law will NOT effect the large givers who can make big dents in the campaign balance. 

If your combination of charitable gifts and property tax exceeds the standard deduction you will still itemize.   Even someone who's pay property tax of $5,000, gives $10,000 to church and a combined $10,000 to other charities will surpass the $24,000 standard.  For a generous single person it is an even easier call.   Don't get me wrong, that would be very generous but these people are not the ones who will drive the big numbers.   Bottom line is anyone in the above position or giving more than that will still itemize. 

[VU75]

Local universities puzzle over new endowment tax
Formula puts Northwestern, U. of C. on the bubble — but payment might come later
BY DAWN RHODESCHICAGO TRIBUNE
Northwestern University and the University of Chicago may get a reprieve from paying an endowment tax under the new federal tax overhaul, but both could end up shelling out millions in the near future.

Congress passed the tax legislation Wednesday, and President Donald Trump signed it into law Friday.

The legislation imposes a 1.4 percent tax on net investment income at private colleges and universities with more than 500 students and where the market value of endowments equals more than $500,000 per student. At least 50 percent of a school's students must reside in the United States.

That would put University of Chicago and Northwestern right on the bubble. At $7.82 billion and $9.8 billion, respectively, the schools carry a couple of the largest endowments in the country.

The University of Chicago is closer to being tax-eligible because of its smaller enrollment. But exactly where that cutoff lies is open to interpretation. Even the universities are confused.

"We still aren't real clear on whether Northwestern would be affected by the excise tax in the next year or not," said Alan Cubbage, a Northwestern University spokesman.

University of Chicago leaders also do not know whether the tax would hit the South Side university, according to a spokesman, Jeremy Manier, who said unresolved details in the legislation were "making it difficult to assess the bill's full impact."

"The new tax on endowments at certain nonprofit private universities will have a negative effect on the ability of universities to make vital, long-term investments in education and research," he said in a statement.

Still, even if they escape the tax for now, both universities will most likely pay it in the near future — a prospect that even Northwestern acknowledged.

"We are fully anticipating that, if not next year then in later years, that we will be subject to a tax," Cubbage said. "When it occurs, we will pay the tax."

The new tax provision marks a striking shift in how the federal tax code treats the nation's richest universities and their burgeoning endowments.

Endowments are long-term funds that provide sustained support for a university. In many cases, donations to endowments are restricted to specific purposes — such as to fund a professorship, or financial aid — so the money cannot be distributed solely at a university's discretion.

But earnings from an endowment also can provide critical support to a university's annual finances. Endowment dollars were 10.5 percent of University of Chicago's 2016-17 operating budget, according to its annual report.

Historically, university endowments have not been taxed because they are part of a nonprofit entity — the university — that is tax-exempt. But now, university endowments will be levied similarly to how the government taxes private foundations.

The change is expected to generate $1.8 billion in federal revenue over 10 years, according to an analysis by the Joint Committee on Taxation.

To determine eligibility for the tax, the law stipulates dividing the fair market value of the endowment at the end of the preceding tax year by the full-time equivalent enrollment. If that quotient is above $500,000, schools will owe the tax.

That, at least, is the general idea.

Full-time equivalent enrollment counts the raw number of full-time students as well as the number of part-time students whose collective credits add up to a full-time student. It is not the same as student head count and thus is a more fluid metric open to interpretation.

How to calculate an endowment's net assets is vague as well. Liz Clark, senior director of federal affairs for the National Association of College and University Business Officers, said college and university endowments are structured differently from private foundations, so the tabulations also must be distinct.

In both cases, advocates and university officials say, the federal government has much work to do to clarify the parameters of the tax. Abrupt changes to the bill in recent days left experts scrambling to evaluate it, with slightly different results.

For example, the National Association of Independent Colleges and Universities, a Washington-based advocacy group for private institutions, named more than 30 universities that met the requirements for the levy. That list — headed by schools like Princeton, Yale and Harvard — initially did include University of Chicago, but a spokeswoman later said it does not meet the threshold after the Tribune questioned the calculations.

A separate analysis from The Chronicle of Higher Education used a different methodology and also included University of Chicago as one of the schools that would have to pay next year — although just barely.

The University of Chicago's endowment rose from $6.54 billion in 2014 to $7.82 billion as of October. Its full-time equivalent enrollment during that period rose from 14,181 to 15,302, according to university and federal data.

Using the university's 2017 figures, the South Side campus' endowment now equates to $511,044 per student.

Northwestern's endowment spiked from $7.5 billion in 2014 to around $9.8 billion now, according to Cubbage and federal data. The full-time equivalent enrollment during that time rose from 19,153 to about 20,500, Cubbage said.

For now, that puts Northwestern just beneath the minimum threshold for the tax, at $478,000 per student.

The recently passed tax overhaul is hardly the first time legislators have targeted well-endowed universities.

The issue came to the forefront in 2008 when two senators sought information from dozens of schools on how they were managing their endowments. But public dialogue seemed to fizzle once the recession hit and endowments declined.

Legislators revived the conversation in the last couple of years, with a House subcommittee devoting multiple hearings toward examining the issue last fall. The president announced his intention to target college endowments during the election season.

Those discussions largely revolved around the argument that wealthier colleges were generating vast sums of money and devoting comparatively little of it to lowering tuition and easing debt burden on students.

There is national research to support some of those general ideas. Recent studies have showed that several highly selective private schools can afford to admit and provide aid to more low-income students. Others have concluded that the net cost of college — what students pay after all financial aid is considered — still prices out low-income families.

This tax, some counter, does nothing to correct those systemic inequities.

"This is an unprecedented new tax on nonprofit organizations which will diminish resources institutions would have otherwise had available for scholarships, academics, and other mission-related expenses," said Clark, of the university business officers association.

In addition to the endowment levy, the final bill also doubles the standard deduction, which experts say may discourage private donations to universities. Public universities increasingly have pursued private benefactors to support their institutions in the face of diminishing public funding. Advocates also said caps on state and local tax deductions could hurt state budgets and further threaten state support for higher education.

drhodes@chicagotribune.com

Twitter @rhodes_dawn

[crusadermoe]

Valpo only wishes it could be exposed to this new Federal excise tax. 

Let's assume Valpo has 4,000 FTE students.  To reach that new taxing threshold of $500,000 in endowment per student, you would need a $2.0 billion endowment. 

Valpo's endowment is far below $$250 million.  And the "biggest campaign ever" in VU history is on pace to raise about $85 million from now through 2023.

[vu72]

Just checked and the Forever Valpo campaign total has been updated to $167,922,758.  67.2% of the goal.

[crusadermoe]

Good to see the increase.   

The campaign went public at $135 million raised.  At the begiinning of this thread we all joined the excitement about the event and the news article.

Now at $167 million to date on the website you have a gain of $32 million since that public announcemen of Sept
23, 2015.  Easy math says $32 million raised over that 16 month period is a pace of $2 million per month..

So the time needed to raise the balance of $83 million is 42 more months.  We would celebrate the finish at the  projected month of July 2021.

Maybe 2022 brings a focus on athletics?

[covufan]

Maybe 2022 brings a focus on athletics?

Which would mean that 2020 was behind us.

[loschwitz]

Giving appears to have slowed down.  Is it too much to hope for a blockbuster gift at this point?  Gustavus Adolphus College in Minnesota is also involved in a major capital campaign.  In less than a year three alumni couples have pledged gifts of 40, 25, and 10 million dollars.   Amazing generosity from alums.

[VUGrad1314]

Good to see the increase. The campaign went public at $135 million raised.  At the begiinning of this thread we all joined the excitement about the event and the news article. Now at $167 million to date on the website you have a gain of $32 million since that public announcemen of Sept 23, 2015.  Easy math says $32 million raised over that 16 month period is a pace of $2 million per month.. So the time needed to raise the balance of $83 million is 42 more months.  We would celebrate the finish at the  projected month of July 2021. Maybe 2022 brings a focus on athletics?

Can our programs wait that long and still keep the momentum going?

[crusadermoe]

That's the $83 million question.....

[mj]

Giving appears to have slowed down.

Well, considering that my wife and I gave a nice amount of money last year and have yet to receive an acknowledgment or thank you from the university, this doesn't really surprise me.

[vu72]

New total in is $169,614,378 which means they have raised $1,691,620 in about the last 45 days.  now at 67.8% of target.

[crusadermoe]

Wow, VU72, that's even slower. 

At that pace you are moving ahead to goal at just $1m per month.  ($1.6 million in 1.5 months aka 45 days).  If that pace doesn't increase, the campaign will take 81 more months to meet goal and finish in December 2024.  The chapel gift was booked in 2011.

Given that Harre raised $230 million in just five years (2005 to 2009), you wonder how the current guy feels about his pace.   

[vu72]

Wow, VU72, that's even slower. 

At that pace you are moving ahead to goal at just $1m per month.  ($1.6 million in 1.5 months aka 45 days).  If that pace doesn't increase, the campaign will take 81 more months to meet goal and finish in December 2024.  The chapel gift was booked in 2011.

Given that Harre raised $230 million in just five years (2005 to 2009), you wonder how the current guy feels about his pace.   

I would guess Mark Heckler (who became the President in 2008 so was a part of the previous campaign) would acknowledge the slow pace but also be realistic because of its nature and goals.  Previous campaigns have had a center piece as follows:

Lighting The Way--The Center For The Arts

Three Goals One Promise--The Library

Our Valpo Our Time--The Union

Forever Valpo: The Campaign for Our Future--Endowment??

It seems like raising funds for a tangible asset like a shiny new building is a lot easier than raising funds for something as nebulous as endowment.  You know, "give us your millions and you will be able to clearly see the reaction on the faces of the students when they get a tenth of one percent from the 5% allowed each year".  Clearly more challenging but also so very important.

[vu84v2]

Building on what some other posters said, I think that a big problem with an endowment campaign is that donors have (or have the perception that they have) no discretion on how their donations are ultimately used. My guess is that many people are like my wife and I and have programs, functions or buildings at Valpo that we prefer to donate money towards and programs, functions or buildings that we will not let our donations go towards. Everyone, of course, has different priorities and that is their right. But regardless of their priorities, focusing on the endowment means everyone can get the perception that their donations will go towards things that they don't feel are priorities.

In general, I would argue that universities strongly prioritize getting donations in which the university has sole discretion how the money is used. The Valpo Fund is another example of this. Having dealt  with this recently, I would suggest that the drivers for stressing donations in which the donor has no discretion go far beyond University Advancement and involve the University Finance organization and even Federal Tax law. However, I would advise that the UA people at Valpo seem pretty good at working with people and understanding their preferences (but they are still bound by a lot of university policies and some Federal laws).

[ValpoFan]

With all due respect, that is not accurate. Just like the other gifts, endowment gifts can be established to service a particular program or college or whatever cause you are interested in.

[crusader05]

It is True that you can set up an Endowment for something particular, like Counseling Services, or scholarships for specific colleges but I do know that the goal is to work to also grow the general Endowment and that it has been encouraged for people to not be too restrictive on their donation so as to give the University more Leeway. In the end it makes sense, things change over time and interests in specific majors or colleges change and it's good to have a flexible pot of money to work with where the needs for scholarships are and not have it all locked in.

Also, Valpo Day of giving is set for April 11th. In the past they've saved announcing several larger gifts and matching donations until that day so we may see a bit of a jump at that time. I've also heard that they will be rolling out even more crowdfunding programs that day as well.

[vu84v2]

In looking back at what I wrote, I definitely got off track and agree that the first paragraph is not really accurate. I greatly appreciate ValpoFan's comment, as he is right that endowment gifts can be established for particular programs or causes (ValpoFan was even respectful in his or her justified criticism).

Still, I do feel that there is a push at any university to get donations that are not aligned to a specific cause and there are a lot of rules and processes that attempt to discourage donations to particular programs or colleges. We just went through this process with Valparaiso and it was difficult and time-consuming to set up an endowment/donation plan that quickly got donated money put towards its intended use. However, we did eventually get it structured to meet our objectives and fit within Valpo's rules and processes.

[crusadermoe]

Your questions or concerns raise some flags.  That would point to some problems. 

Unless the website campaign total is running behind, there are been no real gains in the campaign total since VU72 posted on March 10 and the total raised still falls short of $170 million.   

[sfnmman]

The latest news indicates that they have raised nearly 180 million.  This information was in one of the Proud to be Valpo postings.  Curious as to how much the Proud to be Valpo day brought in.  As I remember from last year, the University is somewhat slow to publish the results.  Don't know all that is involved in coming up with the total.

[crusader05]

I think they have to identify matches and get pledges in writing plus figure out which team won which award and it all moves super slowly but I think I saw they had over 800 donors which was more than last year

[crusadermoe]

The "Forever Valpo" web page now lists $175 million plus as the total.

I do think I saw $169m on that page yesterday but it was probably lagged out of date.   Glad to know it has gone up. 

But I don't see "$180 million" anywhere.       

[sfnmman]

Look at some of the postings re: Proud to be Valpo.  Here's the exact quote:

There has been great momentum behind Forever Valpo: The Campaign for Our Future since its launch. Thanks to the support of Valpo donors, Forever Valpo has raised nearly $180 million! Take a look back at the video that kicked off The Campaign. https://t.co/KLJk3I91le

[vu84v2]

I am all in favor of Valpo achieving the goals of the campaign and other programs to raise funds, but does a university (or any other non-profit organization) ever say that there is not great momentum behind our campaign?

[crusadermoe]

The video is extremely well done.   Very inspiring and reflects a full breadth of what happens at Valpo.

The dollar update of "nearly $180 million" suggests that the speed is really picking up since VU72 said $169m a few posts back in early March. 

Is it possible that $175.6 qualifies as "nearly $180 million"?   Plausibly so.  If the specific number is closer to $180 million, why not post it on the "update" web page? 

[crusadermoe]

Copied from the Forever Valpo web page TODAY, April 14.

Campaign Progress
Raised to date: $175,070,858

Goal: $250,000,000