The ultra wealthy often mitigate their tax bills by bequeathing millions of dollars to their alma matters for specific projects, such as a new cancer research center or expansion of a marine fossil park. However, with the recent tax overhaul, the tax benefits received from these gifts could be curtailed. The new Republican Congress will be considering a plan that requires a quarter of gifts to wealthy colleges be used for financial aid. If the donations are not used for that, then the gift would not be deductible, further risking the school’s charitable status. Controlling where the money goes is not alleviating the current cost crisis many experience in trying to pay for college. Further, such restrictions on these bequests have the potential to reorder the philanthropy world. It begs the question: should feeding a hungry child in Baltimore or adding a state-of-the-art video editing room to your children’s private school be treated the same for tax purposes?
See Janet Lorin, Rich College Donors’ Big Tax Break Suddenly in Danger, Private Wealth, January 5, 2017.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
