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| Those present at the Phillips and Abbot celebration weekend whose names had been recently inscribed on the Benefactor’s Wall in George Washington Hall are, from left, Michael Scharf ’60 and his wife, Fiona; David Parker ’81 and his wife, Janet Tiampo; Mary Claire Clarkson and her husband, Stephen ’55; and Robert Campbell ’66. Not pictured are Ted Forstmann ’57, Neison Harris ’32 (deceased) and his son, King W.W. Harris ’61, Margaret and Charles Gage ’21 (deceased), and Nelson and Claudia Peltz. |
On a lovely Wednesday in May, some 30 alumni, parents and friends of Andover gathered on the Phillips Academy campus to tour the Addison Gallery, eat lunch, enjoy a student musical performance and hear updates from Head of School Barbara Chase and incoming School President Allegra Asplundh-Smith ’04.
The celebrants were linked by more than just an experience with Phillips Academy; they were united by their determination to have a role in securing its future, for they represented the larger number of people who have in some way provided for PA in their estate planning.
Known as the Samuel Phillips and Sarah Abbot Society, that larger group includes more than 400 men and women who have either informed PA of their bequest intentions or made gifts of assets which, though already delivered to the school, will continue to provide them with income during their lifetime. Society members, who are invited to such festivities each spring, range chronologically from a Class of 1911 widow through a graduate from the Class of 1998.
According to David Flash, Andover’s director of gift planning, fund-raising efforts in this arena met with unprecedented success during the past fiscal year, which ended on June 30.
While the reluctance of some people to disclose the provisions of their wills prior to death makes it impossible to quantify revocable bequest intentions, irrevocable life-income gifts raised as of mid-June totaled more than $4.7 million, topping significantly the previous one-year record of $3.9 million in fiscal 1999.
Nationally about two-thirds of planned giving dollars take the form of gifts by will; recently, for example, PA learned of a $1 million bequest intention from a member of the Class of 1954 and a $250,000 bequest intention from a 1983 graduate. Increasingly, though, most commitments come in the form of life-income gifts. Such arrangements carry powerful benefits both for the academy and for the donors, says Flash, who attributes this year’s fund-raising success to the relatively weak performance of the U.S. financial markets overall.
Particularly profitable for the donor is a gift of appreciated securities, rather than cash. By turning over appreciated securities to Andover, Flash says, donors may, depending on circumstances, sidestep a potentially large capital gains tax; receive a generous charitable gift deduction; and, typically, earn much higher income on the committed assets than they did before making the gift. Additional boons include recognition for their generosity while they are still alive and participation in decisions about whether their contributions will eventually be used toward scholarships, faculty support, campus maintenance or another mutual priority. What’s more, such gifts help boost the reunion giving totals of donors’ classes and provide models for other potential philanthropists.
Take, for example, an anonymous $2.5 million charitable remainder trust set up last July by an alumnus seeking to both support Campaign Andover and maximize his income as he entered retirement. The assets in question were paying only about 1.5 percent in the equities market. By donating them to Andover, the man paid no capital gains tax, and he received a charitable income tax deduction of $1.2 million for his gift. Best of all, he boosted his income from those assets to 5.2 percent, increasing their earnings from $37,500 to $130,000 annually for as long as he lives.
Another unnamed alumnus, who had been considering a bequest to Andover, decided to “advance” his gift by passing on to the school a $1 million certificate of deposit that was rolling over. By doing so, he more than doubled his annual income on the investment and also received a charitable gift deduction and the satisfaction of having a say in where Andover will apply his gift.
Other folks may elect to set up a retained life estate, by which they can transfer ownership of their home, yielding huge benefits in terms of capital gains tax avoidance and a charitable giving deduction while also retaining use of the property during their and their spouse’s life spans. Yet another way of giving is through the charitable lead annuity trust, in which Phillips Academy manages and derives income from certain assets for a specified number of years, after which those assets—which benefit from significant tax protection—can be turned over to the donor’s heirs. The benefits of both such arrangements have been augmented by the recent low-interest-rate environment.
People considering making mutually beneficial gift arrangements not only have the benefit of Flash’s advice; they also gain from the wisdom of Melville Chapin ’36, an attorney who volunteers his services as chair of the academy’s Charitable Trusts and Estates Committee. In addition, the Office of Gift Planning works with donors who want to share other, non-monetary assets with PA, says Flash, who has helped facilitate gifts of everything from art to antique furniture to a DNA sequencer for the new Gelb Science Center. |
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