Committee on Development Meeting
September 30, 2005
At the June meeting, we reported Hamilton was among the early not-for-profit organizations to request a Private Letter Ruling (P.L.R.) from the Internal Revenue Service that would allow donors to establish charitable remainder trusts that participate in the investment return of the entire Hamilton endowment. Ropes & Gray, counsel to Harvard, the first not-for-profit entity to obtain a favorable ruling, submitted Hamilton's documents on November 5, 2004.
Counsel advises that Hamilton?s request has passed the technical review process and is awaiting final approval by the Chief Counsel. We will advise you once Hamilton receives the P.L.R.
Through the good work of a trustee, a potential donor is considering a seven figure unitrust that would participate in the investment return of the entire endowment.
As of June 30, 2005, The Trustees of Hamilton College managed planned gifts totaling $65,463,000, including ten charitable remainder unitrusts, with a market value of $24,002,000, that are invested with a portion of Hamilton's endowment. The P.L.R. will allow these ten trusts to participate in the investment return of the entire endowment.
A second timely topic also should be noted. Possible legislation that would allow lifetime contributions of retirement plan assets, IRAs for example, has been discussed at these meetings for many years. The recently enacted Katrina Emergency Relief Act of 2005 does not permit lifetime contributions of retirement plan assets outright or in trust.
However, the Katrina legislation suspends the limitations on cash gifts for the remainder of 2005, allowing gifts of cash to be deducted up to 100% of each donor's contribution base, essentially Adjusted Gross Income (AGI).
Under this provision, a donor who is at least 59 1/2 could withdraw funds from his or her IRA and contribute them outright to Hamilton, offsetting almost all of his or her income tax liability on the withdrawal.