NEWSLETTER
SPRING 2011
BRITISH SCHOOLS
AND UNIVERSITIES
FOUNDATION, INC.
Serving Commonweath Educational, Scientific and Literary Institutions since 1964
WHOM DO WE SERVE?
British Commonwealth educational,
scientific and literary institutions.
WHAT BENEFITS DO WE OFFER?
Grants paid in Sterling, at 100% of the
amounts contributed by donors, who
then qualify for U.S. tax deductions. No fees or other charges.
HOW IS THIS POSSIBLE?
BSUF is a nonprofit, tax-exempt
foundation with no full-time staff or office overhead, managed by volunteers who serve without compensation of any kind. It earns investment income and receives member dues and gifts to its
scholarship funds.
WHY WE SERVE: Our primary mission is to promote
active support of the fundraising efforts
of British Commonwealth schools and universities by their U.S. alumni/ae and friends. We also underwrite the
cost of one or more British Marshall
and Fulbright Scholarships annually,
fulfilling our founders’ commitment
to support the work of U.K. Scholars
studying in the U.S. and U.S. scholars
studying in the U.K. TWO ESSENTIAL KEYS TO PROTECTING YOUR
DONORS’ U.S. TAX DEDUCUTIONS
The problem with unrestricted gifts…
We are often asked why the INFO Form— the information form on which
we ask our member institutions to list the purposes for which they are currently soliciting alumni/ae gifts— does not include “Unrestricted” or “Annual Fund” as acceptable gift categories. This requirement is not an oversight or an arbitrary choice on the part of
BSUF, but the result of an Internal Revenue Service ruling that governs
501(c)(3) charitable foundations making foreign grants:
Ruling 66-79 of the IRS Tax Code says, “Contributions to a domestic charity which are solicited for a specific project for a foreign charity
organization are deductible under Section 170 of the Code where the
domestic charity has reviewed and approved the project as being in
furtherance of its own exempt purpose and has control and discretion
as to the use of the contribution”.
This is why we ask you to be as specific as possible on the INFO form
about the projects for which you seek funding. A “project” is a planned undertaking with a defined purpose, objectives and goals. Our directors
are responsible for reviewing and approving projects that are consistent
with the educational support mission for which BSUF sought and was
granted tax-exempt status. Thus, support for the renovation of a science laboratory, for scholarships
and bursaries, or for an endowment that provides funds for scholarly
research are all projects that are clearly in keeping with the Foundation’s
mission of support for education.
The reason why BSUF cannot accept “Annual Fund,” or “Unrestricted
Giving” or even “Areas of Greatest Need” as giving categories is that such
descriptions are so broad that BSUF cannot fulfill its responsibility as a
501(c) (3) charitable foundation to ascertain whether or not the uses to
which the funds will be put are consistent with its tax-exempt purpose. For example, “Unrestricted Gifts” could be used to fund a staff retirement
gift, or research for proprietary commercial uses, neither of which would be acceptable.
There is, however, an acceptable way for donors to rely upon your institution’s judgment in choosing among approved projects according to your own priority of needs. After listing on the INFO form specific educational projects for which funding is needed (such as Bursaries, continued on page 3
NEWSLETTER
SPRING 2011
BRITISH SCHOOLS AND UNIVERSITIES FOUNDATION, INC.
MAKING IT EASY TO GIVE LARGE GIFTS: Part 2
By Roger Martin, Vice Chair, BSUF
In the Fall BSUF Newsletter I made a case for considering
Charitable Remainder Trusts as a unique way alumni/ae
who are U.S. taxpayers can make significant gifts to your
institution.
A Charitable Remainder Trust is a type of trust that provides a lifetime income to the donor or the donor’s designated beneficiary – typically, his/her spouse. The year the trust is created your alumnus gets a charitable tax deduction (depending on the age of the income beneficiary) and, if the trust is made up of appreciated
stock or property, capital gains tax is avoided. The donor or his/her beneficiary then receives an attractive annual
payout based on the market value of the trust assets
(normally between 5% and 6% of their value at the end of the prior year) during his or her life. At death, the charitable remainder provides a potentially significant gift to your institution. In this article, I’d like to talk about how you might market
this wonderful possibility.
In your next alumni newsletter, consider an article on the
benefits of Charitable Remainder Trusts, requesting that
alumni contact you if they are interested. Feel free to use
July 31 deadline for
UK government match.
BSUF is aware of the UK government matching scheme,
administered by the Higher Education Funding Council for
England, which matches funds raised by 31 July 2011 and
we want to do everything we can to assure that gifts the
foundation receives meet that deadline.
the wording in this and my article in the October 2010
Newsletter (see http://www.bsuf.org/Newsletters/Autumn10.pdf)
Since almost any bank in the United States can set up a Charitable Remainder Trust, ask the interested alumnus
to talk to someone at their bank familiar with CRTs. This
banker should be able to put the vital statistics of the
alumnus or his/her designated income beneficiary (age, tax
bracket, etc) into a computer program that will outline the
tax benefits that can be expected once the trust has been
created, as well as projections of annual income based on
various assumptions regarding future investment results.
continued on page 4
To this end, we suggest the following:
• Please contact your American alumni and ask them to
get their gifts to BSUF before June 14, the date of the
last directors’ meeting before the deadline. • Realizing that the UK government matching scheme is
a one-time only affair, and wanting to accommodate our
institutions in the best way we can, a special meeting of
the Executive Committee will be held on July 5 to vote
on gifts received after June 14 but before July 4.
• We will do our best to act on large gifts ($10,000 or
more) received after July 4th, but can make no further
commitments. Obviously, the earlier we receive gifts the better.
If you know of any large gifts from your alumni that qualify
for the UK match and that BSUF will be receiving after
June 14, please contact us at [email protected]
Page 2
NEWSLETTER
SPRING 2011
BRITISH SCHOOLS AND UNIVERSITIES FOUNDATION, INC.
TWO ESSENTIAL
KEYS TO
PROTECTING YOUR
DONORS’ U.S.
TAX DEDUCUTIONS
continued from page 1
construction, renovations), you
can add a category labeled “Or any of the above”, thereby
achieving the aim of an unrestricted gift. BSUF has the
satisfaction of knowing that the
institution intends to use the funds
for an approved project. The donor has the satisfaction of knowing that his or her claim to a
charitable tax deduction will not
be disallowed.
….. and what does it mean when BSUF says that it must
have “control and discretion” as to the use of funds?
The reference in Ruling 66-79 to the need for a foundation to have “control and discretion as to the use of funds” means that donors may not make it a condition of their gift that the proceeds be used for a
specific institution or project. If BSUF is permitted no
latitude as to the use of funds, but is merely instructed to
transfer the funds to an overseas institution, the Internal
Revenue Service does not construe this as a “gift” to
a tax-exempt U.S. charity – and direct gifts to overseas
institutions do not qualify for tax deduction. However,
donors may “express a preference” regarding use of the
funds for consideration by the foundation’s directors. This can arouse feelings of apprehension on the part of donors who wonder whether those directors might exercise their “sole discretion” to divert the proceeds
from their gift to some purpose other than a grant to
their “preferred” institution. Before it approves an institution as being eligible to receive grants, BSUF reviews the list of the specific projects for which that institution is currently raising funds to ensure their consistency with these purposes. Donors may express a preference for one of an approved
institution’s specific projects, or for “any of the above”
on its current project list, without concern that BSUF’s
Directors might have a problem making a grant to that
institution.
Donors may elaborate in further detail their expressions
of preference for an approved institution and its projects
– requesting, for example, that the institution use the
funds for some specific aspect of an approved project, or that it acknowledge their gift as a tribute or memorial to a certain individual. In the unlikely event that a donor’s more detailed wishes inadvertently violate U.S.
law, regulations or public policy, BSUF would consult
with the donor’s preferred institution to find an alternative,
legitimate way to satisfy the donor’s intentions.
With these safeguards in place, donors need not be concerned that their expression of preference for the use of contributed funds to support a particular institution
might be ignored in favor of a grant to a different
institution.
BSUF’s overriding concern is to ensure that no donor is
ever at risk of having his or her charitable tax deductions
“disallowed” by the U.S. Internal Revenue Service
– either now, or during some future audit. For that
reason, our procedures have been recently updated in the interests of meticulous conformity with applicable
rules and regulations.
Page 3
NEWSLETTER
SPRING 2011
BRITISH SCHOOLS AND UNIVERSITIES FOUNDATION, INC.
MAKING IT EASY TO GIVE LARGE GIFTS: Part 2
Continued from page 2
I also know people with special expertise in setting up
Charitable Remainder Trusts for British Commonwealth
schools and universities and will be happy to put you in
touch with one of these persons if you contact me at [email protected]
The donor’s attorney next reviews the Trust agreement, and
if satisfactory to all parties involved, the trust is funded with
cash or securities.
This next part is critical: In order to receive all the tax benefits afforded by the U.S. tax code, the charitable
remainder (what’s left over in the trust after the income
beneficiary dies) must be given to a U.S. 501(c)(3) charity
with the ability to make grants abroad. This is what BSUF does – so have your alumnus name BSUF, not
your institution, as the remainderman with a request that
preference be given to your institution.
The bank then manages the money and makes quarterly
payouts during the life of the income beneficiary.
When the donor and spouse dies, the charitable remainder
is forwarded by the bank to BSUF. The directors of BSUF
will then honor the wishes of the donor.
The Latest BSUF Grants
So far this year BSUF has made grants totaling $1,361,639 to these institutions:
Aldenham School
The Gresham’s Foundation
Bedford School Foundation
Haberdashers’ Aske’s Boys’
School Foundation
Birkbeck College
Bolton Schoo
Bradfield Foundation
Brighton College
Bromsgrove School
Bryanston School
Canford School
Cardiff University
Clifton College
Downside School
Eastbourne College
The Edinburgh Academy
Foundation
Epsom College Education Trust
Eton College
Felsted School
The Girls’ Day School Trust
Goldsmiths College
Haileybury College
Harrow Development Trust
The King Edward’s School
Birmingham Trust
Pembroke College Cambridge
The Perse School
Queen Mary, University of London
Foundation
The Radley Foundation
Royal Anthropological Institute
Rugby School
King’s College School,
Wimbledon
Sherborne School Foundation
Lancaster Royal Grammar School
St. George’s School, Harpenden
Latymer Upper School
Stonyhurst College
The Leys School
Taunton School Foundation
Magdalen College School, Oxford
Trinity College, Oxford
Malvern College
The University of Adelaide
The Manchester Grammar School
University of Edinburgh
Merchant Taylors’ School
University of Leicester
Michael Palin Centre for
Stammering Children, The
University of the Arts London
Mill Hill School Foundation
Westminster School, London
Oakham School
St. Edward’s School, Oxford
Uppingham School
Oundle School
Page 4