Former volunteer gives DIA $1.71 million

Michael H. Hodges, Detroit News Fine Arts Writer 6:39 p.m. EST January 12, 2016

Elizabeth Verdow

Elizabeth Verdow, Retired schoolteacher and museum volunteer Elizabeth Verdow left the Detroit Institute of Arts $1.71 million.(Photo: Detroit Institute of Arts)

It’s the sort of thing museum development directors fantasize about.

The Detroit Institute of Arts announced Tuesday that a former volunteer at the museum gift store left the DIA $1.71 million in her will.

Elizabeth Verdow, who died in 2014 at age 86, was a former Detroit Public Schools art teacher who volunteered at the museum from 1990-2009. The Farmington Hills resident was a graduate of Albion College and apparently a devotee of contemporary art.

“We are humbled by Elizabeth’s longtime dedication to and support of the DIA,” said museum Director Salvador salort-Pons in a prepared statement. “We are deeply grateful and moved.”

Museum officials said Verdow was unmarried, had no children, and no close relatives.

Verdow’s will stipulated that three-quarters of the money, or $1.26 million, be used to buy new contemporary painting and sculpture. The remaining $450,000 will go into the museum’s operating endowment.

Retired museum store manager and buyer Anna Helkowsky remembered Verdow as a quiet, unassuming woman who was a pleasure to work with.

“She was part of what I called my ‘Sunday sunshine’ crew,” Helkowsky said. “Elizabeth came in, and whatever I needed, she would do.”

She was aware Verdow loved the museum, Helkowsky added, “but I did not know the extent of her passion. And who knew she had this much money?”

Verdow’s name will go up on the Robert S. Tannahill Society donor wall, and any art acquired with her funds will have the source noted on the gallery label.

Source: mhodges@detroitnews.com

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Sandy and Joan Weill and the $20 Million Gift That Went Awry

philanthropy

From left, Paula Zahn, Sanford Weill, and Joan Weill at the opening night gala of Carnegie Hall’s 116th season, held at the Waldorf Astoria. Credit Christopher Smith for The New York Times

If you take a tour of some of New York’s most notable cultural and medical complexes, you are bound to encounter — and re-encounter — one prominent family name.

There is Weill Cornell Medical College on the Upper East Side, where numerous buildings carry the names of its two longtime benefactors, Joan Weill and her husband, Sanford I. Weill ; the latter was the chairman of its board of overseers until the end of 2014. Across town, there is Weill Recital Hall, the 268-seat theater at Carnegie Hall, named after the couple when Mr. Weill helped lead a $60 million fund-raising drive for the concert center in the mid-’80s.

Farther west and a few blocks down is the Joan Weill Center for Dance – Alvin Ailey’s eight-floor, 12-studio complex, opened in 2005 – which bears the name of its former chairwoman, who stepped down last year. (There is even the Joan and Sanford I. Weill Hall, a theater at Sonoma State University, in Rohnert Park, Calif., and the Joan and Sanford I. Weill pediatric hematology-oncology department at the Rambam Health Care Campus in Haifa, Israel).

But one place that will not bear their name is on the campus of Paul Smith’s College, in upstate New York, close to where the couple owns a home. For a brief spell this last year, the school was on the verge of being named Joan Weill-Paul Smith’s College, courtesy of a promised $20 million donation from the Weills.

Things there hit a snag. The college was created with money and land bequeathed by its founder, Phelps Smith, to honor his father, a local hotelier. When Phelps died in 1937, his will stipulated that the school be built on the site of the former Paul Smith’s Hotel. The will also required that the institution be “forever known” as Paul Smith’s College of Arts and Sciences.

The college, which has a student body of about 1,000, argued that it was so financially strapped (operating at a loss as recently as 2013) that it needed to be released from this restriction in order to safeguard its future.

While some people immediately objected to the name change, Cathy S. Dove, the college’s president, posted an open letter on the college website, praising the Weills and arguing for the name change.

“Joan and Sandy are presenting us with an opportunity to solidify the long-term financial health of our school,” Dr. Dove wrote. “Joan and Sandy are held in high esteem among the world’s most generous philanthropic and educational circles, and her name will bring us new opportunities to introduce our school to other supporters of higher education.”

But in October, a judge ruled that the college had not offered enough evidence to prove it could not survive financially without a name change and blocked the agreement to do so. A few weeks later, the college announced that the Weills would no longer donate the $20 million.

“It was a naming gift, so without the court allowing us to go forward, there was no money,” said Bob Bennett, Paul Smith’s spokesman. “That was the deal, right from the beginning.”

“I think it’s unfortunate that the Weills are not going to give the money,” Mark Schneider, a lawyer who represented alumni who opposed the name change, told The New York Times after the offer was rescinded. “If they really wanted to give a gift to the school, it shouldn’t be contingent on something as self-glorifying as naming the school after Mrs. Weill. They could have named something else.”

“I find it in sort of bad taste,” he added.

It was an ignominious and messy moment for a couple whose social prominence and philanthropic largess were well known, dating back to when Mrs. Weill and her husband, who is known as Sandy, began to make their ascent up the rungs of the city’s financial and cultural institutions.

The recent setback at Paul Smith’s, and the damage it seemingly has done to the couple’s reputation, is largely undeserved, friends say.

The theater producer Daryl Roth, who has gotten to know Mrs. Weill at Alvin Ailey, cautioned that one possible misstep in a lifetime of charitable giving should not cement a reputation that took more than 60 years to build.

“They’re really good people,” she said of the couple. “It upsets me when there’s this kind of finger-pointing.”

“They have been basically excellent examples of people who were fortunate enough to succeed and used it for the betterment of society,” said Kenneth J. Bialkin, who is on the board of directors at Carnegie Hall, and was Mr. Weill’s legal counsel for much of his 50-year career in the financial services industry.

Neither Mr. nor Mrs. Weill would respond to several requests for comment, nor did most of the people associated with the institutions they have contributed to over the years.

If Mr. and Mrs. Weill have given back an enormous amount, it is partly because they know what it is like not to have the world handed over on a silver platter.

Mr. Weill grew up in Brooklyn in the 1940s. His father, Max, ran a dressmaking business and then a steel importing company. His mother, Etta, was a housewife. Max’s successes were overshadowed by financial setbacks. The marriage to Etta frayed, before resulting in divorce. Max was constantly spending too much money on clothes and cars.

As a teenager, Mr. Weill was determined not to be like his father, but he also shared with him a propensity to get too close to the sun, alternating between tremendous self-discipline and moments of sloppiness.

 Weill Cornell Medical College, on the Upper East Side of Manhattan. Credit Michael Kirby Smith for The New York Times

Weill Cornell Medical College, on the Upper East Side of Manhattan. Credit Michael Kirby Smith for The New York Times

Faced with dropping grades as a teenager, he was shipped off to military school, where he shaped up and got into Cornell University, according to his 2006 memoir, “The Real Deal: My Life in Business and Philanthropy.” At Cornell, he joined a fraternity, began driving around in a yellow convertible and nearly flunked out during his freshman year.

While on spring break two years later, Mr. Weill received a phone call from his aunt. There was a new girl in the neighborhood who had recently come East from California. Her name was Joan Mosher. She was studying at Brooklyn College and living nearby with her parents.

As he recalled in his autobiography, when he showed up at her doorstep on April 1, 1954, for their first date, her mother looked him up and down, and then walked off to tell her daughter that perhaps she should wear flats instead of heels, so as not to loom over her date.

But the evening went well, and the following year the couple married at a ceremony at the Essex House before 50 friends and family members. Mr. Weill’s father didn’t show up.

At this point, Mr. Weill didn’t exactly have a career plan. But one day, he passed a stock brokerage where the sputtering ticker tape and clanging phones immediately attracted him. So he got a $150-a-month job as a runner at Bear Stearns and began studying to get his brokerage license, which he obtained in 1956.

In the 1960s, Mr. Weill formed the securities firm Carter, Berlind, Potoma & Weill with his friends Arthur Carter, Roger Berlind and Peter Potoma.

As it grew over the next two decades, gobbling up other brokerages and ultimately becoming Shearson Loeb Rhoades, Mr. Weill had a fireplace installed in his office on the 106th floor of the World Trade Center, smoking cigars between meals at the company’s lavish dining room, where, according to Monica Langley’s biography “Tearing Down the Walls,” there was a painting featuring Mr. Weill shaking hands with Gerald Ford.

Mrs. Weill, meanwhile, became a trusted adviser to her husband, one his employees came to respect. “It was clear Sandy shared all his concerns and plans and problems with her,” Mr. Bialkin said. “He would never make an important decision without talking it over with her.”

In 1982, Mr. Weill joined the board of Carnegie Hall shortly after selling his company to American Express for close to $1 billion.

With the merger complete, he was due to become the new company’s president. But it didn’t go well, and he wound up being pushed out, gradually stripped of power with nothing but an empty office and a lone assistant.

During his next year of unemployment – before he started building another securities firm into the colossus that became Citigroup – Carnegie Hall served as his unofficial clubhouse.

There, he led the steering committee for the organization that went on to raise $60 million for the restoration of Carnegie Hall, $2.5 million of which came from the Weills’ own pocket. When the renovation was complete, the name on its smaller 268-seat theater became the Joan and Sanford I. Weill Recital Hall.

At a fall gala in 1986, Mr. and Mrs. Weill beamed as they were name-checked from the stage in between performances by Frank Sinatra, Lena Horne, Vladimir Horowitz and Leonard Bernstein.

“Somehow,” Mr. Weill later wrote in his memoir, “it felt even better to give money away than it had to earn it in the first place.”

So they did more of it.

“They’re spectacular,” said Herbert Pardes, the former chief executive of NewYork-Presbyterian Hospital/Weill Cornell Medical Center. “They’re smart as can be, they’re generous as can be, and they’ve been involved. What they did there was not from a distance.”

Still, there were detractors, particularly during the aughts, when the couple received a torrent of negative press for what occasionally seemed like self-serving behavior on the boards on which they served, and when Citigroup nearly collapsed during the financial crisis of 2008.

For Mrs. Weill, the association with Paul Smith’s College – one that had grown over 20 years, during which the couple contributed $10 million for a new library and a student center (both of which were named for her) and raised millions more from other donors – was seen by many as a measure to cement a legacy of her own, one on par with  that of her more flamboyant, better-known husband.

But it was not to be.

“The Weills are really wonderful people, and I know they’re disappointed.” said Dr. Dove, the college’s president. “I’m disappointed. Honestly, in every conversation I’ve had with them they’ve continued to say we care about the students, and I don’t think that will ever change.”

Source: http://www.nytimes.com/2015/12/20/fashion/sandy-and-joan-weill-and-the-20-million-gift-that-went-awry.html?rref=collection%2Fcolumn%2F2015-year-in-styles&action=click&contentCollection=style&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection&_r=0

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Charitable bailouts can save your C corporation clients big on taxes

This strategy can be a win for donors, C corporations, and charities.

By Patricia M. Annino, J.D.

philanthropyBecause of the accumulated earnings tax, a C corporation with significant accumulated earnings can be a problem for a CPA trusted business adviser. Paying the money out as a dividend leads to a second tax the client probably does not want to pay. On the other hand, the longer the company holds the cash and does not use it, the more likely the IRS will impose the accumulated earnings tax.

But if a C corporation owner client is philanthropically inclined and would like to remove the earnings from the company while still maintaining a controlling position of its stock, it may be time to explore a charitable bailout. That’s because this technique can help the donor achieve his or her charitable objectives, avoid capital gains tax, and distribute excess cash that has been accumulated in the corporation tax-free. If the owner’s succession plan involves transferring ownership of the company to his or her children, the owner can also achieve this goal through a charitable bailout.

In a charitable bailout, a corporation’s owner gifts stock in the corporation to a charity, and the corporation then redeems the stock using the corporation’s retained cash. Both the gift of the stock and its redemption are income-tax-free. If the charity is public and if the donor has held the stock for more than one year, the donor is entitled to an income tax deduction for the fair market value of the stock under Sec. 170(b)(1). If the gift is
made to a charitable organization that is not a public charity, the income tax deduction is limited to the donor’s basis in the stock under Sec. 170(e)(1).

Stockholders may choose to donate the stock to a charitable remainder trust for redemption. Normally, if a charity is a private foundation or a charitable remainder trust, a redemption would violate the self-dealing rules. However, a “corporate adjustment” exception (http://www.irs.gov/Charities-&-Non-Profits/Private- Foundations/Exceptions-Self-Dealing-by-Private-Foundations:-Certain-recapitalization-transactions) of Sec.
4941(d)(2)(F) permits redemptions when all stock of the same class as the donated stock is “subject to the same terms” and the charity receives at least fair market value for the stock. To be “subject to the same terms,” the corporation must make a bona fide redemption offer on a uniform basis to the charity and every other stockholder.

Why use charitable bailouts?

The charitable bailout can be very beneficial to all parties involved. It allows a charity to receive cash and a corporation to bail out its accumulated cash while the donor avoids any built-in capital gains tax on the donated stock. The capital gain on the redeemed stock is considered passive income and, as gain from the sale of property, is exempt from the unrelated business income tax (UBIT) under Sec. 512(b).

Charitable bailouts have far better tax consequences than direct donations by a stockholder. If a corporation paid a dividend to the stockholder that the stockholder then contributed to the charity, the stockholder would then owe income tax on the dividend. But, with a charitable bailout, the stockholder can claim the charitable income tax deduction for the donated stock (subject to the 30% and 50% limits of Sec. 170). Though it is the stockholder, not the corporation, who receives credit for the gift, it is the corporation’s cash, not the stockholder’s cash, that is being used. A corporation that has accumulated significant cash will have less cash after a charitable bailout, and thus be less likely to be subject to the accumulated earnings tax.

The charitable bailout technique can also be useful in succession planning. If parents and children all own stock in a C corporation, the parents could reduce or eliminate their ownership stake by contributing their stock to a charitable remainder trust, which stock the company could then redeem. For this strategy to be effective, the children must be stockholders prior to the redemption and the corporation must have sufficient cash to effectuate the redemption. (See IRS Letter Rulings 200720021 and 9338046. Redemption by a note and not cash is a prohibited act of self-dealing).

Potential trouble spots

Advisers and their clients should be aware of several possible pitfalls when using charitable bailouts. One is the imputed prearranged sale doctrine (Rev. Rul. 78-197; Rauenhorst, 119 T.C. 157 (2002); Letter Ruling
200321010). If a stockholder contributes stock in an arrangement in which the charity is compelled to sell the stock, the IRS could take the position that the shareholder had assigned the sale proceeds to the charity, and tax the transaction as if the stock were sold or proceeds distributed to the stockholder. It is worth noting that Rev. Rul. 78-197 states redemption proceeds are taxable as income to the individual stockholder only if the charitable entity is legally bound or can be compelled by corporation to surrender its shares for redemption.

As always, advisers should review state law before recommending a charitable bailout. Also, if the transaction is occurring between related parties, they should be sure to review the charitable organization’s conflict of interest policy.

Note that donor-advised funds, private foundations, and supporting organizations must be mindful of the excess business holdings prohibition and 10% tax under Sec. 4943. This prohibition and tax do not apply to public charities.

In summary, if a client has significant retained earnings in his C corporation and has philanthropic intent, the charitable bailout is a strategy well worth considering.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Judge Rejects Request by Paul Smith’s College to Change Its Name

By BENJAMIN MUELLER and KRISTIN HUSSEY OCT. 7, 2015

In the rarefied world of multimillion dollar gift-giving, Paul Smith’s College, named for a 19th-century hotelier and tucked in the forests of northern New York State, carried little cachet. So when Joan Weill, the wife of the Wall Street

Paul Smith College Entrance

Joan Weill, the wealthiest benefactor of Paul Smith’s College, made an offer of $20 million with the requirement that the school change its name to Joan Weill-Paul Smith’s College. Credit Nancie Battaglia for The New York Times

billionaire Sanford I. Weill, proposed a $20 million gift that would lift the struggling college’s fortunes, its officials saw national prestige on the horizon.

Mrs. Weill’s only condition — one that experts say is becoming more common among major donors — was that the institution become Joan Weill-Paul Smith’s College.

But a state judge rejected that change, ruling in a decision released on Wednesday that Mrs. Weill’s money did not give the college license to violate a provision in its founder’s will that enshrined his father’s name on the college in perpetuity.

The dispute over the name is one of several such controversies that have reverberated through philanthropic circles in recent years, including the transformation of Avery Fisher Hall in New York into David Geffen Hall and the recasting of the Miami Art Museum as the Jorge M. Pérez Art Museum of Miami-Dade.

 The Joan Weill Adirondack Library at Paul Smith’s College. Mrs. Weill sought a bigger role at the school by donating $20 million. Credit Nancie Battaglia for The New York Times

The Joan Weill Adirondack Library at Paul Smith’s College. Mrs. Weill sought a bigger role at the school by donating $20 million. Credit Nancie Battaglia for The New York Times

The Joan Weill Adirondack Library at Paul Smith’s College. Mrs. Weill sought a bigger role at the school by donating $20 million. Credit Nancie Battaglia for The New York Times

And yet it is one of the few cases of its kind to yield a judicial ruling, experts said, putting the college at the center of a nascent legal debate over how long institutions must adhere to restrictions set at their founding. Uncertainty about such rules looms ever larger over groups that have grown reliant on big gifts that often come with strings attached.

The decision sent a strong message to other organizations that perpetual naming agreements would not be lifted easily, and it left the fate of Mrs. Weill’s gift in doubt. It also brought an end to months of sometimes vitriolic debate at the college, in Paul Smiths, N.Y., as the case provoked class resentments and clashing expectations about the very purpose of philanthropy.

“This decision is a big, big deal,” said Doug White, an adviser to philanthropists and nonprofits who teaches at Columbia University. “It’ll help define what the court system thinks of the idea of changing the name of an organization like this.”

The college, the only four-year institution in the six-million-acre Adirondack Park, was created in 1937 with a bequest from Phelps Smith, which required that it “be forever known” as Paul Smith’s College of Arts and Sciences, in honor of his father. Its student body of about 1,000 doubles the area’s population.

It also attracted the notice of Mrs. Weill. She and her husband owned a home nearby, and she fell in love with the idea of a school that helped students who were the first in their families to attend college “change their lifestyle”, she said in an interview around the time her gift was announced. The college is best known for its hospitality and forestry programs, and nearly all of its students receive some form of financial aid. “I felt, ‘O.K., I can make a difference here,’ ” she said in the interview.

Like many schools in remote locales that charge high tuition, Paul Smith’s has struggled with declines in enrollment and revenues, trends driven by shifting student demographics, the college argued in court papers.

The college operated at a loss in 2013, and over the last two decades, more than 85 percent of its donations were from fewer than 150 people, almost all of whom were not alumni. It came to lean in no small part on the largess of Mrs. Weill and her husband, who donated almost $10 million to help pay for a new library and student center, both of which were named for her, and also raised nearly $30 million from other donors. (The Weill name also adorns a medical college and a recital hall in New York City.)

Mrs. Weill sought to extend her reach with the $20 million gift, announced in July, which college officials cast as a lifeline that could allow them to recruit students nationally and draw more donations from the couple’s wealthy friends. The college argued in court papers that it in order to consummate the gift, it needed to undo the century-old naming restriction, which it said “nearly fatally impedes the ability of Paul Smith’s to seek large gifts from a single donor in order to make the investments it needs to remain viable.”

 Joan Weill in 2012. Credit Cindy Ord/Getty Images


Joan Weill in 2012. Credit Cindy Ord/Getty Images

Justice John T. Ellis of State Supreme Court in Franklin County disagreed. State law says a court can change the rules attached to a charitable gift only if complying with them has become “impossible or impracticable.” After reviewing years of financial records as well as the college’s $30 million revitalization plan, he concluded that the college had not offered enough evidence to prove it would not survive without a name change.

“The petitioner falls far short of showing that its name is holding the college back from being a shining success both in enrollment and in producing successful college graduates,” Justice Ellis wrote. “Significantly, Paul Smith’s has failed to demonstrate the college cannot operate effectively within that changing demographic absent the requested relief.”

The ruling appears to complicate the college’s path to financial stability, jeopardizing its role both as an economic driver and a source of pride and identity in the rural northern part of the state.

The college’s president, Cathy S. Dove, who pushed for the change alongside the board of trustees, said the college was considering its options.

“While we are disappointed in the court’s decision, the board of trustees and I truly appreciate the enduring connection our people feel to the college and our traditions,” she said, apparently referring to alumni reaction.

Reached by phone on Wednesday, Mrs. Weill declined to comment on the decision. It was not clear whether she would go forward with her donation. A spokeswoman for the college, Shannon Oborne, said, “That’s an area that we’re really not fully prepared to talk about right now.”

Some students cheered the decision; others had recently expressed concern that the college needed money to educate students from low-income families.

“The name means a lot to people who come here,” Anthony Pernisi, a senior who collected 300 signatures from students opposed to the change, said on Wednesday. He and others said the resistance was to the name change alone, not to the college’s largest donor. “I don’t feel like it was a fight or a war against one side or another,” he said.

 A display at the college bookstore in the Joan Weill Student Center, another campus building paid for by the Weills. Credit Nancie Battaglia for The New York Times

A display at the college bookstore in the Joan Weill Student Center, another campus building paid for by the Weills. Credit Nancie Battaglia for The New York Times

A display at the college bookstore in the Joan Weill Student Center, another campus building paid for by the Weills. Credit Nancie Battaglia for The New York Times

The reaction had been somewhat stronger among alumni, who had said in scores of online posts and public comments that the proposed change undermined the college’s integrity and called into question Mrs. Weill’s motives as a philanthropist.

In comments submitted to the state attorney general’s office, which oversees nonprofit organizations and had to approve the college’s request for a name change, graduates described themselves as a scrappy lot who tended to dirty their hands in the course of their work. They said they did not understand why Mrs. Weill felt she had to attach her name to the gift.

“The petition not only fails the truth test, the philanthropists fail the good-will test,” a 1980 alumna, Sheila Strachan, said in an Aug. 12 email to the attorney general’s office.

Philanthropic experts and advisers said Mrs. Weill’s stipulation reflected the increasingly transactional nature of philanthropy, as institutions once named for people accomplished in their fields accepted that using a donor’s name was the only way to guarantee financial solidity.

While many attribute such requirements to ego, “I think that’s too simplistic,” said Charlie Brown, who has raised money for Johns Hopkins and Stanford’s medical school.

“There’s a natural human desire to leave behind some trace that we’ve had an existence here and that it mattered,” he continued.

Others said the anger expressed by those connected to Paul Smith’s was a sign of things to come, as development officers turn more and more attention to very wealthy donors, at the expense of more modest gifts.

“Philanthropy is becoming de-democratized in the sense that there are more and more large gifts,” said Mr. White, director of a master’s program in fund-raising management at Columbia. “That demand is going to become more and more prevalent.”

The judge’s decision about Paul Smith’s, he added, offered something of a road map as institutions tried to undo perpetual name agreements for the first time. It also, he said, served as a warning about making new naming promises, as the leaders of Lincoln Center did this year in pledging to preserve their concert hall’s new name, David Geffen Hall, forever.

“We’re treading on fairly fertile ground,” Mr. White said, “and this decision will start the process.”

 

Source: http://www.nytimes.com/2015/10/08/nyregion/judge-rejects-paul-smiths-colleges-request-to-change-its-name.html?_r=0

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Gordon College donor reneged on $50M pledge due to misgivings about president

By Mary Moore/Boston Business Journal

Gordon College Donors, philanthropyA wealthy California real estate developer whose $60 million pledge to Gordon College made him the biggest donor in the college’s history says he added another $50 million to his bequest — but reversed course after becoming disillusioned with the Wenham school’s leaders.

Dale E. Fowler told the Boston Business Journal he instead gave half the total amount he had pledged to Gordon College to Chapman University near his California home. In 2013, Chapman University, located in Orange, named its law school for Fowler after receiving $55 million from him.

When Fowler and his wife Sarah announced their original $60 million gift to Gordon College in 2007, R. Judson Carlberg, now deceased, was the college’s president.

“(Gordon College) got a new president who we have had serious misgivings about. We have not had a very pleasant relationship with that individual,” said Fowler, referring to President Michael Lindsay, in a phone interview.

Fowler told the Business Journal his frustration is unrelated to any of the college’s recent issues. In fact, Fowler said, he had given the $55 million gift to Chapman University long before any of the recent headlines broke about Gordon College.

Fowler said the additional $50 million in assets he added to the original bequest to Gordon College was announced at a meeting of the Gordon College trustees. Most of the original $60 million bequest remains intact, Fowler said.

Kurt Keilhacker, a venture capitalist based in California and the chairman of Gordon College’s Board of Trustees, said that he and other college officials were unaware that Fowler had added $50 million to his original pledge.

As for Fowler‘s opinion of Lindsay, Keilhacker said, “Sometimes there’s a clash of personalities that is not always situated in fact.” He declined to elaborate.

The tension between Fowler and Lindsay has become public as Gordon endures considerable public criticism for banning homosexual activity by faculty, staff or students. City officials in Salem and Lynn severed relationships over the policy, which came under scrutiny after Lindsay joined religious leaders in signing a letter asking President Barack Obama for an exemption to a presidential order barring federal contractors from discriminating in hiring based on sexual orientation.

Similarly, the student newspaper at Emmanuel College reported last week that the college’s athletic teams will no longer play teams from Gordon College, a protest by Emmanuel’s athletic department related to the letter that Lindsay signed. The two schools are not in the same athletic conference, but their teams played each other as a result of contracts they sign, which will not be renewed, the student newspaper reported.

Gordon College also has had to respond to questions about its policy on homosexual activity from the New England Association of Schools and Colleges, or NEASC, the regional body that accredits colleges and universities.

More recently, Gordon College officials have faced criticism by some faculty members for the college’s decision to auction off a portion of the rare books included in the historic Edward Payson Vining collection.

Source: Boston Business Journal

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

The Goal of Generational Philanthropy

Man watering plant image, family legacyI worked with a family with its center goal using its financial and social wealth to make a difference in the world at large through concentrated philanthropic efforts. The family’s financial wealth was built generations ago. Individual wealth of the family members no longer exists across the board at the level of the founders. What endures is a well funded philanthropic foundation whose goal is to implement change in very specific areas – education and faith.

The founders of the business that created the foundation were hard working and grateful for the ability to support themselves through their endeavor. They believed what Teddy Roosevelt said when he enacted the federal gift tax – “The transmission of enormous wealth to young men does not do them any real service and is of great and genuine detriment to the community at large.”

The third generation is a now steward of that wealth and focuses it on making a difference in these areas. Even though the family created significant wealth through its entrepenruial efforts, its overriding value was: to whom much has been given, much is expected and it is better to give than to receive.

It is interesting that one family member in the third generation who has achieved significant wealth from his own entrepreneurial activities has also begun his own philanthropic legacy (in addition to carrying on the family legacy). The difference in the goals is that with the founders, the goal was to build the wealth and then, when they accomplished far more than they could ever have contemplated, the goal became to give it away. The oldest son’s goals became to achieve significant wealth and give it away. While his children were growing up, the dinner table conversation was focused on both building wealth and the philanthropic impact of that wealth. The legacy of philanthropy – three generations later – is continuing. The youngest generation now wants to focus on building significant wealth again so their legacy of philanthropy can be individualized if they themselves create the wealth they are giving away.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

When Unhappy Donors Want Their Money Back

By Charlie Wells for the Wall Street Journal

person on a tractor, gift agreementDisappointed Gift Givers Increasingly Are Asking For—and Getting—Refunds From Charities

For most people, giving money to charity feels great.

Asking for the money back is a whole different story.

Yet philanthropy experts say donors increasingly are doing just that: requesting “refunds” on gifts they feel have been misused, ignored, or spent in a way that strays from their original reason for giving.

“Donors are becoming savvier, [and] they are becoming more engaged in how their money is being used,” says Doug White, director of Columbia University’s fundraising-management graduate program.

The ease of accessing financial data on the Internet, as well as a string of high-profile court battles involving donors seeking refunds, are behind the shift, he and others say.

“Twenty years ago, there was just no information market for nonprofits,” says Chuck McLean, a vice president of research at Guide Star, which publishes data on charitable institutions. “Nonprofits would just tell you what they wanted to tell you. And that was that.”

As the changes continue to unfold, there are a few key points donors should keep in mind:

Gift Rules Can Vary

One of the main problems facing refund seekers is the conflicting—and often confusing—information available on how charitable gifts are regulated.

Historically, U.S. law has operated on the principle that “once a gift is given, it can’t be taken back,” says Robert Bennett, a professor of law at Northwestern University who teaches a course on contracts.

These days, however, the thinking on gifts is in a transition period, says Winton Smith, a lawyer who works with charitable organizations to set up planned-giving programs. Some courts are beginning to give donors more power over their gifts after they’ve been given.

Still, charitable-gift enforcement varies by state; different courts have different rules on whether a donor has “standing,” or permission to bring a dispute before the court.

“About 30 states have the Uniform Trust Code, which authorizes donor standing to enforce a charitable trust,” says Robert Sitkoff, a professor at Harvard Law School who studies wills, trusts and estates. But “a New York court has gone further, recognizing donor standing to enforce other kinds of charitable gifts, too.”

Craft an Agreement

The best way to protect your right to a refund is to draft a charitable gift agreement before making the donation, Mr. Smith says.

In an ideal world, such an agreement would include a “gift over” clause permitting the donor to request a transfer of a misused or unused donation to a different charity, one willing to carry out the donor’s original intent. There is less awkwardness, confusion and ill will if you tell a charity to give the money to another charity, Mr. Smith says.

Such agreements should give donors the right to go to court to enforce the terms of the gift, he says.

They also should protect the donor’s right to a jury trial, says Tim Newell, a 56-year-old from Hunterdon County, N.J. who lost a legal battle when Maryland’s highest court declined in 2013 to take up a dispute involving Belward Farm, a 138-acre land gift his late aunt, Elizabeth Banks, made to Johns Hopkins University in 1989.

The dispute over development of the farm was decided by a judge rather than a jury, a legal strategy Mr. Newell now says was a mistake. “There isn’t a doubt in my mind we would be in a completely different position if we had gone before a jury,” he says.

Johns Hopkins says it is grateful to Ms. Banks and her relatives for their generosity and is abiding by its agreement with them. “We have lived up to, and will always live up to, our agreement with them,” spokesman Dennis O’Shea wrote in a statement.

Talk It Through

While detailed gift agreements are a good idea, they aren’t the only way to prevent or resolve disputes.

Many disagreements between a donor and institution can be settled by having a rational conversation, says Eileen Heisman, chief executive of National Philanthropic Trust. She recommends focusing on finding the root cause of the dispute.

“Ask yourself why you are having these dissatisfied thoughts,” she says. “Are they emotional or intellectual? Are they actually based on what the charity is doing, or is this a personnel issue?”

When having this conversation, keep in mind that the charity’s interests aren’t necessarily at odds with yours.

Charities have a strong interest in cooperating with their donors—at least while the donor is alive, says Harvard’s Dr. Sitkoff. Happy donors tend to do something charities love: keep giving them money.

Prepare for the Consequences

Taking back a donation can have unexpected consequences. The biggest is likely to pop up around tax time.

“If you get money back, it’s just counted as income and you pay income taxes on it,” says Jill Horwitz, a professor who teaches nonprofit law at the University of California at Los Angeles. “That essentially undoes the deduction that you got before.”

Whether this will be better or worse for an individual depends on his or her income-tax rate at the time the gift was made, and the rate when the gift was refunded. There is no adjustment made for a changed rate, says Dr. Horwitz.

Perhaps the most important thing to calculate is how taking back a gift might make you feel, says Ms. Heisman, of National Philanthropic Trust. “It all comes down to one question,” she says. “How do you want to be remembered?”

Source: WSJ.com – Mr. Wells is a news editor in New York. He can be reached at charlie.wells@wsj.com.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

What You Need to Know Before Donating Art

By Daniel Grant

Your Name on a Plaque Is Nice, but It Might Cost You More Than You Think

For investors thinking about donating art, the most important thing to know is this: It isn’t as simple as…donating scales image, appraised valueart.

The benefits of a donation are clear. The owners may have a fondness for a particular museum or university they have in mind as a recipient, for instance. And the ego gratification is powerful.

“There’s a legacy involved,” says Ralph Lerner, founder of Art World Advisors, which helps collectors determine what to do with their art. “You get your name on a plaque on the wall. You can take your grandchildren to the museum to show them the plaque.”

But ego aside, donors have a lot of factors to consider before making a decision. Among them: Selling may bring them far more money than they can save with a tax break for their donation. If they donate, the tax break varies depending on who the donation goes to and what the recipient does with it. And the recipient may have very different ideas from the donor’s about how the art will be displayed.

Running the Numbers

First, investors need to be aware of the difference, for their finances, between selling and donating. Peter Jason Riley, a certified public accountant in Newburyport, Mass., ran the numbers for a hypothetical U.S. taxpayer with an adjusted gross income of $500,000 who owns a painting appraised at $100,000 that she had purchased for $20,000.

What happens if she donates the painting? For donations of art, owners generally can claim a federal tax deduction of up to 30% of their adjusted gross income each year, making the limit in this case $150,000. So donating the painting to a qualifying museum would permit this owner a deduction in the current tax year of $100,000, assuming she hasn’t made other art donations totaling more than $50,000. (If donations in a given year exceed the limit for deductions, the overage can be deducted in following years, up to five if necessary, with the 30% limit applying each year.)

That means the tax benefit this year for the donor in this case would be $41,118, according to Mr. Riley.

If the painting was sold for the appraised value of $100,000, assuming a typical 15% sales commission to an auction house or art gallery, the seller would owe $31,372 in capital-gains tax, resulting in a net profit of $53,628, Mr. Riley says.

So the owner would end up $12,510 better off by selling than by donating. That doesn’t take into account the cost of an appraisal—typically $1,000 to $3,000—which isn’t always necessary for a sale but would be required in this case before the artwork was donated. The Internal Revenue Service requires an appraisal for donations of property over $20,000.

Selling won’t always be better financially. For one thing, selling might net far less than the appraised value of a piece of art. But this is an exercise owners should work through to get a sense of what they might be sacrificing by donating.

How Much of a Deduction?

Art owners also should be aware that their tax break for a donation will depend on several factors. In some cases, donors can claim a tax deduction based on the appraised value of the art. But in others the deduction is based on the price the donor paid for the art, which can be much lower than the appraised value.

One factor: The donor’s deduction can only be based on the appraised value of the art if the recipient qualifies as a public tax-exempt organization. If the recipient is a private tax-exempt organization, the deduction is based on the price the donor paid.

A public tax-exempt organization is one that receives at least one-third of its support from the general public; museums, universities and other schools, hospitals and churches are among the institutions that generally qualify. A private tax-exempt organization doesn’t rely on funding from the public. The Ford Foundation is one prominent example, and there are many private foundations funded by wealthy individuals.

But that’s not the only distinction the IRS makes. A deduction can’t be based on the appraised value of the art unless the donation is related to the recipient’s mission. Few recipients except museums are likely to pass that test. For donations to recipients that fail that test, the deduction is based on what the donor paid for the art.

Donations that clear both those hurdles face another one. If the recipient sells the art within three years, the amount deductible by the donor reverts to the purchase price instead of the appraised value—potentially leaving the donor with a bill for back taxes.

One other tax-related issue for those who deduct the appraised value of a donation: The IRS subjects appraisals to review by its Art Advisory Panel, which is composed of art dealers and museum curators. And the panel often makes substantial adjustments to appraisals.

Taxpayers may be subject to substantial penalties if the IRS finds that the donated items are significantly overvalued, so it’s imperative that the appraiser has a legitimate basis for arriving at a valuation, such as comparable sales.

Donation Negotiations

Finally, it isn’t only the IRS that can take some of the fun out of a donation. Recipients can be prickly about how the art will be displayed—or even if it will be at all.

In this case, though, donors have some leverage. Art experts encourage donors to negotiate the terms for their gifts before turning over the art. For instance, the donor might demand that the art be on display for at least three months every three years—or on permanent display.

Or in the case of multiple works being donated, owners might demand that the art be given a special exhibition and be written up in a catalog, and that the pieces must be kept together and none of them can be sold. A donor can also demand perks like free lifetime membership at the highest level for family members.

If a potential recipient balks at a donor’s terms, the owner can look for a more pliable recipient. But donors who have their hearts set on the most prominent institutions as recipients should expect less flexibility.

“I encourage people to donate to universities and smaller museums,” says Susan Brundage, director of appraisal services at the Art Dealers Association of America. “They are thrilled to get something that might be seen as minor by the Met or the Modern or the Whitney. Those larger museums will only put most donations in their basements, never to see the light of day.”

And no plaque for the grandchildren to see.

Source: WSJ.com – Mr. Grant is a writer living in Amherst, Mass. He can be reached at reports@wsj.com.

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Book Review: ‘Abusing Donor Intent’ by Doug White

The Robertson family gave millions to ensure more Princeton grads would work in government. When they didn’t, the Robertsons sued.

By Leslie Lenkowsky

In 1961, in a burst of John F. Kennedy-inspired idealism, investor Charles S. Robertson and his wife, Marie, an heiress to the A&P supermarket fortune, gave $35 million to Princeton University, one of the largest donations to a university up to that time. Its purpose was to help Princeton students “prepare themselves for careers in government service,” particularly positions in the federal government dealing with international affairs.

Four decades later, following years of growing acrimony, the Robertsons’ son, William, and two close associates sued Princeton to get back the money, which had grown to some $600 million. They claimed that the university had not been using the funds as Charles and Marie Robertson intended, a violation of the legal and ethical responsibilities that recipient institutions have toward their donors.

In “Abusing Donor Intent,” Doug White, who teaches fundraising management at Columbia University, gives a detailed, though sometimes overwrought, account of a case that attracted national attention and highlighted the frustrations that donors feel when they see their money being used for purposes they never intended. After six years, the suit resulted in a settlement that left Princeton with much of the money but gave a share of it to a new foundation controlled by the Robertson family. The whole episode shows the potential dangers of philanthropic generosity, for donors and recipients alike.

From the start, Charles Robertson doubted Princeton’s capacity to do what he and his wife wanted. “In 1960,” Mr. White writes, “Robertson didn’t think much of the graduate program at the Woodrow Wilson School,” which prepares students for public-service careers. Based on meetings in Washington, he had concluded that the school’s director was not “qualified,” the school itself had a weak reputation and its advisory council of old government hands had little influence.

The Robertsons went ahead with their gift anyway, assuming that the Wilson School would improve if it had the funds. Princeton seems to have agreed. With the Robertson money and its investment returns, the school began spending on faculty, research centers and a new building that it thought would enhance the Wilson School’s quality and reputation. By some measures, it succeeded. U.S. News & World Report, for example, now ranks Princeton’s public-affairs programs in the top five among American graduate schools.

 

abusing donor intent book image,charles robertson, donor intentAbusing Donor Intent

By Doug White
(Paragon House, 316 pages, $19.95)

Where Princeton did not succeed was in sending more of its students to Washington. By 1970, Charles Robertson was complaining to the Wilson School’s dean that too many of its graduates were going to work in “academia, private business, or the law,” and he urged changes, such as admitting more applicants who wanted government jobs or teaching more public administration. Shortly after, William became the principal member of the family on the Princeton-controlled board that oversaw the Robertson gift and took up, with increasing force, his father’s criticisms.

Princeton knew it had a problem with the Robertsons. In 1980, the college’s president, William Bowen, acknowledged that the members of the family “hold tightly to the original promises” and that “even to raise questions with them would be counterproductive in the extreme.” Nonetheless, Princeton refused to change course, with Mr. Bowen insisting that the Robertson funds should be spent in ways that “will benefit other parts of the University as well as the School itself,” which meant underwriting public-service programs but also a range of needs beyond the Robertsons’ core mission, including supporting university overhead and faculty outside the Wilson School. Such spending precipitated the 2001 lawsuit.

In this dispute, Mr. White sees an unambiguous violation of donor intent. Princeton, he believes, should have carried out the family’s wishes, requested modifications or returned the money. Instead, as he argues and court records bear out, income from the Robertson gift was spent in ways that did little to put more Woodrow Wilson School graduates in the federal government. Forensic accountants had trouble tracing the uses of the money through Princeton’s labyrinthine bureaucracy.

Princeton maintained that, rather than violating donor intent, it was honoring it: The university was using the gift to recruit top-flight scholars, thereby enhancing the Wilson School’s program. And the school claimed that, once the gift had been made, it had the authority to determine how best to use the funds. The failure of more students to go to Washington, it also argued, was caused not by its own lack of effort but by the declining appeal of federal government jobs and the increased attractiveness of other forms of public service, such as working for international nonprofit groups.

Although Mr. White believes that the Robertsons made the better case, the settlement, overseen by a New Jersey court, found merit on both sides. And indeed, it is hard to see the Robertsons’ experience as an emblem of flagrant donor abuse on a par with, say, the Bass grant to Yale University in the 1990s, when Lee Bass, hoping to foster the study of Western civilization, eventually took back his money, frustrated by Yale’s unwillingness to set up the courses or programs he had in mind. Princeton’s fault lay more in a gradual diversion of the earnings of Robertson gift to a variety of uses within the university and its failure to meet the family’s specific goal of increasing the number of graduates entering the federal government. The family’s frustration was understandable in any case, and surely Princeton at times showed an arrogance or lack of transparency that no recipient of philanthropy should emulate.

Since 2011, the new Robertson Foundation for Government has provided fellowships to 80 graduate students at five public-policy schools. This more modest and direct approach may stand a better chance of achieving the family’s goals than entrusting philanthropic resources to an Ivy League institution with its own purposes and needs.

Mr. Lenkowsky is professor of philanthropic studies and public affairs at Indiana University.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

The Rise of Spend-Down Philanthropy

More Philanthropists Give Away Their Foundation’s Assets in Their Lifetimes

By Veronica Dagher

person holding a roll of money, spend-down philanthropyA recent Wall Street Journal article gives some great information about philanthropy.

Their adult children had successful careers, were raising families in different parts of the country and simply weren’t interested in the same causes their parents were passionate about.

That unwillingness to take over the family foundation eventually forced the parents about a year ago to make a difficult decision: Start spending down the foundation while they’re still alive.

“They didn’t want the foundation to become a burden,” says Ms. Burns, a principal with Riverbridge Partners.

More philanthropists are choosing to donate all of their foundations’ assets within their lifetimes. About 50 years ago, only 5% of the total assets of America’s largest 50 foundations were held by spend-downs. In 2010, that number had risen to 24%, according to Bridgespan Group in Boston.

“It’s a significant shift. For many decades, donors setting up foundations just assumed they’d be around forever,” says Melissa Berman, chief executive of Rockefeller Philanthropy Advisors in New York.

Part of the reason for the change is disinterest among heirs. But there’s also a desire on the part of philanthropists to potentially effect change within their lifetimes, advisers and experts say.

“Like Bill and Melinda Gates, they [some philanthropists] believe that they can make deep investments to address today’s biggest problems, and that other donors will emerge in the future to tackle the problems of tomorrow,” says Elliot Berger, managing director at Arabella Advisors in New York City.

Another primary reason for giving while living is the donor’s ability to control how funds are distributed, Mr. Berger says. “Many storied foundations have seen a mission drift as a result of what could be described as an inevitable distance between the vision and values of the founders and their heirs,” he says.

When a foundation does decide to spend-down, there are some missteps donors need to be aware of, advisers and experts say.

These foundations may not have a clearly stated goal, and since time is of the essence, donors really can’t waste time making mistakes and learning from them, Mr. Berger says.

Foundations with limited durations may be more risk averse, which could prevent them from funding more complicated causes that may take longer to bear fruit, he says.

In addition, spend-down foundations often make the mistake of not communicating early and often enough with staff and grantees, says Jen Bokoff, director of GrantCraft at Foundation Center in New York City, which offers advice on how to make grants.

Giving grantees plenty of notice will help them better prepare for the time when the foundation’s funding is removed. And it will give the foundation more time to help grantees network and find new funding sources, says Betsy Brill, president of Strategic Philanthropy in Chicago. The firm works with both donors and their financial advisers.

Foundations also shouldn’t keep their spend-down a secret from other givers. “Let peer funders know about the closure so that they can help carry out the work the foundation began and possibly form partnerships,” Ms. Bokoff says.

Ms. Dagher is a columnist for Wealth Adviser at WSJ.com in New York. She can be reached at veronica.dagher@wsj.com.

Source: Wall Street Journal – WSJ.com

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

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