Thursday, May 20, 2010

Taxation Without Complete Explanation

The long talked about proposed 5% tax on all donations made to anything related to NC State University seems to have been approved by the Board of Trustees. At least that’s what in the draft minutes coming out of the NCSU Board of Trustees meetings of April 15 and 16.

The draft minutes, supplied by the NCSU Office of Legal Affairs as a result of a public records request, must be approved by the BOT at its next meeting, but for all intents and purposes, the tax, which is being called an assessment fee, is a done deal which brings up several questions, which have been asked of those who should know but who are not responding.

But, before the questions are posed in this space, let’s get you to this point in a quick summary. Quoting and paraphrasing from the draft minutes from a report by the BOT Development Committee to the full BOT:

“…the committee was updated on capital fundraising projects and year-to-date fundraising results. Gift receipts are down 9% from last year at this time, and gifts and new commitments are down 16%. Efforts are being made to increase fundraising activity with alumni, and there are over $32 million in solicitations scheduled to occur before the end of the fiscal year.”

“…the committee discussed at length how to fund the staffing and operations needed to prepare the University for its next campaign and also discussed how to successfully implement a gift assessment fee. A task force has been established to review a gift assessment fee, and this task force will make recommendations to the Vice Chancellor of University Advancement (Nevin Kessler) and the Chancellor (Randy Woodson).”

“…given the importance of the decision regarding the assessment fee to the entire University, it would be helpful to Chancellor Woodson to have the support of the entire Board of Trustees.”

At that point in the BOT meeting a motion was made and seconded “to support a one-time gift fee of 5% with 2% going to the unit that attracted the gift and 3% going to the central advancement organization. The motion carried unanimously.”

So, based on those draft minutes and the passing of the motion, questions have been posed to the Chairman of the Board of Trustees and to the Chairman of the Development Committee. Neither has replied. Questions were not posed to Vice Chancellor Kessler, who should know because it’s his policy, because there is no way on God’s Green Earth that he would reply. Here are the questions:

—When does this policy start?

—Does this assessment cover all financial gifts to NC State University and related organizations including the Wolfpack Club (Student Aid Association)?

—Is the fee within the donation or is the donor required to make an additional donation to cover it?

—How does this affect a tax deduction related to the donation, especially if part of the donation is specifically going to support the regular operations of the University and not to the cause for which it is intended?

—Why use the wording that says “with 2% going to the unit that attracted the gift”? Why not just assess 3% of the gift for Advancement?

—Are there any exceptions? For instance, if $3 million is pledged and/or donated to build the clubhouse at the golf course but only if that full amount is applied completely to the project will the stipulation be granted?

—With gift receipts down 9% from last year this time and overall gifts and new commitments down 16%, and with the Advancement office getting more funding to reverse this trend and actually exceed deficit giving, will the Trustees constantly review the efforts of that department to make sure the additional revenue to Advancement is being used properly and profitably?

—In the draft minutes, it is said that “a task force has been established to review a gift assessment fee, and that task force will make recommendations to the Vice Chancellor for University Advancement and the Chancellor.” Is this something different from the motion that authorizes the 5% assessment?

—Does this assessment apply to current pledges pending actual donations?

—How will this be applied to gifts in kind? If some wants to donate benches, tables, and other items to the golf course or another department, how will the assessment be handled?

—Will there be regular reports available to show how many actual dollars are being added to University Advancement and how it is being spent?

The desire of NC State University to raise more money from private funding is very much appreciated, especially in tough economic times and as the North Carolina legislature is working on a budget that reduces funding. Based on annual donations to NC State University, I expect really great things from University Advancement and not just additional staff, desks and computers. I trust that the BOT will keep its eye on the prize.

Hopefully, the BOT did not just take the word of Kessler for the need for the new policy but considered many other avenues for funding that office. Please understand that opposition to this tax has more to do with the person who will have his hand on the money. He’s not credible based on a blatant lie he told last fall. If he lied about something as simple as why he fired Lennie Barton, to what lengths will he go to gain more money for the operation of his department?

That’s another question that needs to be answered. If anyone has that answer as well as answers to the other questions, your response is welcomed. Otherwise, this new policy, this 5% assessment fee, will be taxation without complete explanation.


  1. Jim, the University is fortunate to have you as their conscience. Your questions are "spot on". I consider the action to "tax" gifts to the University in any manner other than that intended by the giver to be the heigth of ARROGANCE. We already have enough of that in government.
    Winston Hooker, Sr., Class of 1960.

  2. I truly enjoy your Actions and Reactions blog. Being right in the middle of most of what you talk about, especially this issue of the gift tax I always get a kick out of your perspective. Your style of writing is entertaining and enlightening. Keep up the good news!


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