A new tax exemption signed into law by President Bush in August could make it easier for some donors to give to Georgetown, though the exemption was not as broad as administrators had hoped.
A provision of the Pension Protection Act, signed on Aug. 17, allows donors over a certain age to give to educational institutions and other non-profit organizations from their individual retirement accounts without being assessed income tax on the gifts. The provision must be renewed at the end of 2007.
Although the bill received bipartisan support in Congress, some university officials say that the incentives in the bill are not enough to produce a significant increase in donations.
Many colleges and universities lobbied Congress to set the minimum age donors are eligible to receive the exemption at 59.5 years, but the bill sets the minimum at 70.5 years instead and caps the maximum donation eligible for exemption at $100,000 per year.
Scott Fleming (SFS ’72), vice president for federal relations at Georgetown, said that those limitations may reduce the amount of gifts Georgetown could receive in the future.
He added that “the new law will have a significantly diminished impact” on donations to Georgetown.
Jeff Donahoe, senior communications director at the Office of Advancement, which runs the university’s fundraising, said that his office does not expect the new provision to have a significant impact.
“Essentially, the Office of Advancement does not anticipate that the passage of the new bill will alter any plans donors are making” in regards to giving to Georgetown, he said. “Nor does our office anticipate that the new bill will make any noticeable changes in our fundraising progress overall.”
In an interview with The Chronicle of Philanthropy, Jeff Comfort, director of planned giving in the Office of Advancement, said that under the current law, only one of ten multi-million-dollar donors interested in giving money to Georgetown from their IRAs is still willing to make a donation.
But Tony Pals, director of public relations at the National Association of Independent Colleges and Universities, a lobbying group for institutions of higher education, including Georgetown, called the inclusion of the IRA rollover provision a victory for colleges and universities nationwide.
“The Congress deserves a big thank you,” he said. “Charitable organizations have been working on [the IRA rollover provision] for seven years to get this rollover signed into law. Finally something important has happened.”
According to the estimated budget effects of the IRA rollover provision by the Joint Committee of Taxation, the government will lose $856 million in tax revenue over the next 10 years due to the new provision.
Georgetown had long been lobbying for the IRA rollover provision, hoping to encourage greater donation to build the university’s endowment.
In an open letter to the Senate Committee on Finance two years ago, Fleming said that the IRA rollover provision could “result in more than $20,000,000 in identifiable gifts to the university’s endowment over the next two or three years.”
Fleming said that he is happy with the outcome of the long lobbying efforts by universities and colleges but added that he will work to reduce age and monetary limitations and extend the provision to more than two years.
“We are very certain that it would achieve much more if the dollar limit was removed, if the age restriction was reduced to 59.5, and the provision became permanent,” he said.
