There are several types of gifts that first pay income to you and your family and then help Harvard. These also can enable you to dispose of illiquid assets in exchange for income and tax benefits. The lead trust is a gift arrangement that can help you transfer wealth to the next generation in a tax-efficient manner.
News and Opportunities
Now through December 31, 2021, cash gifts made to Harvard can have a greater impact for both you and the University:
- Recent legislation extends through the end of 2021 a provision enacted in the wake of the pandemic that allows donors who itemize their deductions to deduct cash gifts to qualified charities up to 100 percent of adjusted gross income in 2021—up from 60 percent. As in 2020, gifts to donor-advised funds, supporting organizations, and most private foundations do not qualify under the law.
- The law extends and modifies the charitable deduction available to non-itemizers for cash gifts they make to qualified charities. For 2021 only, the law doubles to $600 the maximum amount joint filers may deduct. As in 2020, single filers or married filers who file separately are limited to $300. Gifts to donor-advised funds, supporting organizations, and most private foundations do not qualify under the law.
IRA Qualified Charitable Distributions (QCDs) and the Setting Every Community Up for Retirement Enhancement (SECURE) Act
Under longstanding law, qualified donors may make outright gifts of up to $100,000 per year to Harvard from their IRAs—so-called QCDs. The amount donated to charity is excluded from the donor’s taxable income. In addition, the distributions may help satisfy a donor’s required minimum distribution (RMD) for the year. Moreover, because the QCD offers an exclusion from taxable income rather than a deduction, this strategy is not limited to taxpayers who itemize their deductions. As a result, it may be used by non-itemizing donors who do not ordinarily receive any tax benefit for their charitable gifts. (Please see the above discussion regarding the temporary deduction for non-itemizing donors.)
To benefit from this gift opportunity, the following qualifications (among others) must be met:
- The donor must be age 70 ½ or older at the time of transfer.
- The maximum amount a donor may transfer is $100,000.
- The gift must be outright. Gifts to donor-advised funds or to life income vehicles do not qualify.
- The gift must be transferred directly from the IRA account by the IRA administrator to Harvard. Donors with check-writing ability for their IRAs may use this feature to complete their gift.
Donors should be aware that sweeping retirement legislation enacted at the end of 2019—the SECURE Act—made two changes impacting QCDs:
- The SECURE Act increased the age at which IRA owners must begin taking RMDs from 70 ½ to 72. While IRA owners may still make tax-free QCDs beginning at age 70 ½, the QCDs will not also help satisfy their RMDs until they turn 72 and are required to take RMDs.
- In addition, donors must now reduce their QCDs by the amount of any deductible contributions they make to their IRAs after age 70 ½.
To assist donors interested in making a charitable gift from their IRA, we have provided the following sample letters:
- Sample IRA QCD Request from Plan Owner to IRA Administrator (PDF)
- Sample Letter from Donor Informing Harvard of IRA QCD Transfer (PDF)
The first letter contains specific transfer instructions from the donor to the IRA custody agent.
The second letter is from the donor to Harvard to inform Harvard as to how the gift should be used. This letter is particularly important for donors interested in splitting their gift between multiple Schools or Harvard affiliates. It also ensures Harvard's ability to provide appropriate class credit to alumni donors.
If you have any questions regarding the IRA QCD giving opportunity or how to make a planned gift to Harvard, please contact University Planned Giving at firstname.lastname@example.org or 800-446-1277.
Increased Gift and Estate Tax Exemption
The Federal gift and estate tax exemption for 2021 has increased to $11.7 million per individual and $23.4 million per married couple. The annual gift exclusion amount remains unchanged at $15,000.