I have to agree with Bill's assessment. This seems to be a hefty fee for what
we are trying to accomplish here. And if we are restricted to only giving a
scholarship/gift to a BQ, the 4% on the gain for the year is not much.
Dan
________________________________
From: fighting_texas_aggie_band_class_of_1977-bounce@xxxxxxxxxxxxx
<fighting_texas_aggie_band_class_of_1977-bounce@xxxxxxxxxxxxx> on behalf of
Bill Schwennsen <dmarc-noreply@xxxxxxxxxxxxx>
Sent: Wednesday, January 13, 2021 11:08 AM
To: fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx
<fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx>
Subject: [fighting_texas_aggie_band_class_of_1977] Re: Memorial Fund
Dean, thanks for sending the PDF. Here's how I see it:
The 5% "gift tax" is taken from the earnings on the gift, not from the
principal itself. This "tax" is taken, in our case, after the total of gifts
to our account meets or exceeds $25,000. Since the tax at 5% is more than the
annual scholarship payout of 4%, you can surmise that, once we meet the $25K
goal, it will still be 18 months, to maybe 2 years, before the first
scholarship disbursement is actually made. The faster we get to, or exceed,
the $25K minimum threshold, the sooner that we can start chipping away at that
"gift tax', get that satisfied, and start the clock on accumulating enough
earnings in the account to actually pay a scholarship.
If the Class will allow me an opinion here.... the Foundation does a great job,
but this 5% tax they put on gifts can be (and has been with some Aggies I know)
a deterrent for some potential donors. They are professional fund raisers, and
employ professional money managers (either directly or by contract). That's a
lot of overhead to cover. The 1% annual expense fee is supposed to cover
year-to-year operating expenses, and I'm sure it does... but that begs the
question of what the 5% gift tax is used for. I don't know... I could
speculate but I won't. I'm not in any way downing the Foundation here, but
we're trying to raise what is, for them, a pretty modest amount of money and I
think we need to make sure we as a Class are happy with whatever arrangements
are made.
Those of you who attended the 125 year BQ reunion in '19 might have heard the
TABA Prez at the time talk about the TABA establishing their own fund to throw
off income that could be used for scholarships for the Band, or possibly other
purposes benefitting the FTAB. The TABA runs their money through the Corps of
Cadets Association (CCA).. The CCA manages the TABA's demand accounts for them.
Although the CCA has overhead expenses also, they do NOT charge any sort of
"gift tax" that I'm aware of. I believe that Rick Ashley and Tom Henry are
both in TABA leadership positions; it might be worth reaching out to them to
see if the TABA/CCA have a vehicle that we might use in establishing our
account and what the details are. Again, I'm not trying to pit one
organization against the other (TABA/CCA vs Foundation), I'm just trying to
point out that their might be another avenue worth checking out before we all
start writing checks.
Knowledge is power, and also usually makes for happy donors (and investors). I
hope all of you are well and are managing to avoid the Covid.
BSch
-----Original Message-----
From: Dean B <canyonag77@xxxxxxxxxxx>
To: fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx
<fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx>
Sent: Wed, Jan 13, 2021 9:45 am
Subject: [fighting_texas_aggie_band_class_of_1977] Re: Memorial Fund
You finance whizzes can read the PDF and correct me, but to give my reading of
the Foundation's policy:
The Foundation does not take money from the donation principal.
They collect a one-time fee equal to 5% of the donation, they collect that from
the gains on the donation.
They collect a yearly management fee of 1%, again from the gains, not from the
endowment principal.
The award to the recipient is 4% of the gain on the account. I'm not sure if
gains in excess of the 4% award and 1% fee go back into "our" account.
________________________________
From: fighting_texas_aggie_band_class_of_1977-bounce@xxxxxxxxxxxxx
<fighting_texas_aggie_band_class_of_1977-bounce@xxxxxxxxxxxxx> on behalf of
Dean B <canyonag77@xxxxxxxxxxx>
Sent: Wednesday, January 13, 2021 9:09 AM
To: fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx
<fighting_texas_aggie_band_class_of_1977@xxxxxxxxxxxxx>
Subject: [fighting_texas_aggie_band_class_of_1977] Re: Memorial Fund
You are correct, Bill.
https://cdn.txamfoundation.com/How%20to%20give/The%20Gift%20Process/EXHIBIT_A_Effective_7-1-2020.pdf<https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcdn.txamfoundation.com%2FHow%2520to%2520give%2FThe%2520Gift%2520Process%2FEXHIBIT_A_Effective_7-1-2020.pdf&data=04%7C01%7C%7C0f379f4a9ba044a1e63f08d8b7dd76e4%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C637461509091056287%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=A%2B%2FAo8P3c%2B%2B%2BCeDs4fHhNmgiUKG9a7%2B0bksgLDylL1c%3D&reserved=0>
