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Annual Giving

Planning Your Gift

Financing Buildings

Committee on Development Meeting

June 2, 2006

Following up on Dick Tantillo's remarks, here is evidence from Hamilton and beyond about contributions used to construct, operate and provide funds for capital improvements for buildings.
1.)    The Weber estate distribution and maturation of the Beinecke unitrust are examples of how planned gifts to Hamilton may be used for buildings.
2.)    Outright contributions to construct, operate and provide capital improvements for buildings are preferred, however, creative solutions are being utilized.
3.)    Endowed Funds are in place at Hamilton to maintain and provide capital improvements for several buildings, including the Chapel through a bequest and a Charitable Remainder Trust.
4.)    Colgate recently received a $25 million contribution for its science center and a $10 million endowment contribution to support the operation of the science center and new library.
5.)    Hamilton has discussed with several donors the use of a charitable remainder annuity trust to provide funds to construct a building for interest payments only.
6.)    A hospital received a Private Letter Ruling (PLR) to establish a pooled income fund that would accept contributions from donors, construct a building, lease the building to the not-for-profit hospital and make payments to the donors.
7.)    Several prospective donors are considering charitable lead trusts, the payments from which could be used to pay for construction expenses.
8.)     A Smith College trustee suggested an "arbitrage" model by which Smith would offer bonds to raise funds for construction, encourage unrestricted contributions that would be added to quasi endowment, use income and principal, if necessary, to service the debt, and have a substantial quasi endowment to support the building in perpetuity.
9.)    In summary, a combination of contributions, including outright, remainder trust, lead trust and bequests may be used to provide funds to construct, operate and provide capital improvements for buildings.
At the June 3, 2005, meeting, we reported Hamilton was among the early not-for-profit organizations to request a PLR from the Internal Revenue Service that would allow charitable remainder trusts to participate in the investment return of the entire Hamilton endowment. Ropes & Gray, counsel to Harvard, the first 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 its PLR.
Possible legislation that would have allowed lifetime contributions of retirement plan assets, IRAs for example, which has been discussed at these meetings and on Capitol Hill for many years, was not included in TIPRA 2005.

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