FundFire article "Endowments Fear Trump Tax Plan Will Scare Off Donations" included comments from NEPC's Kristin Reynolds, CFA, CAIA, Partner.
However, a growing number of donors are placing money in annual funds. An annual fund only supports a college’s operating budget for that year, whereas the endowment exists over a long period of time. Spending is at “sustainable levels that enable the endowment to not shrink despite providing ongoing support,” says Kristin Reynolds, a partner and a member of NEPC’s philanthropic and private wealth consulting practice. And if the tax reform is approved, that trend will likely accelerate as donors will feel less inclined to donate to the long-term endowment and will continue giving to annual funds, she says.
The difference is the proposed 1.4% excise tax on universities’ endowments, says Grant Thornton’s Ladd. The excise tax would give less incentive for individuals to donate, since the money would be going to the government.
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