According to a June 2020 survey completed by the College Savings Foundation, the coronavirus pandemic has altered post-high school plans for 37% of high school students. Of those students with altered plans, 40% have decided to go the route of community college. This is the perfect time to examine charitable giving to community colleges.
Community colleges – always a bargain
Community colleges have always been a great way to save money on your college education. In most cases (and you have to be mindful), college transfer programs mean students can complete their general education requirement for a much lower cost than universities. Staying local has its pros and cons, but the dramatically lower cost makes it worthwhile to consider as an option.
Covid 19 and the recession it caused have triggered very high levels of unemployment. The number of individuals going back to school to get retrained for their next career is almost certain to increase as well. Community colleges are expecting continuing increases in enrollment. But even with lower costs, many who have lost their jobs will not be able to afford this education on their own.
Charitable giving to community colleges
There are a number of ways to support community colleges and folks that want to attend them. Some of our clients support community colleges by gifting to their endowment programs, creating scholarships, and participate on boards and scholarship committees.
Colleges and universities use endowments (which come from financial assets donated by supporters) to support teaching, research, and public service missions. Endowments are often used to fund professorships, scholarships, and fellowships. Generally, the university or college can use contributions to endowments any way they choose.
A second option that can be more tailored to your own wishes is to create a scholarship fund. Scholarships, in particular, can be assigned to a specific program like automotive systems, nursing, or computer technology degrees. You have the option to honor or memorialize loved ones by naming the scholarships after them. In some cases, you get to review the applicants and choose the student to receive the scholarship. This can be a great way to involve your family in your giving strategies.
Ways to donate
Remember that donations don’t have to just be money out of your pocket. Highly appreciated stock with a low-cost basis is a great investment to gift to endowments and scholarships. You, as the stockholder, could qualify for charitable deduction on your income taxes. The college then turns around and sells the stock while paying no capital gains. It’s a win-win.
Second, you may also do your charitable giving to community colleges through qualified charitable donation (“QCD”) from your IRA in place of your required minimum distribution if you don’t need the income. The amount is not included in your taxable income, and the college doesn’t pay taxes either. The colleges we have worked with all have brokerage accounts already set up to receive donations like this. We gather their information and transfer the donation electronically with just the need to sign one form.
Given the unemployment rate and the restrictions of Covid 19, a gift made now has the opportunity to do a lot of good.
~ Jennifer Adams
You might also enjoy:
While familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.