University of Michigan graduate students are getting an enormous boost from the largesse of two wealthy benefactors. Berkshire Hathaway Vice Chairman Charles Munger, who attended the school in the 1940s, announced he is gifting $110 million in stock for graduate student housing. In March, Helen Zell, wife of billionaire Sam Zell, a real estate tycoon, pledged $50 million for the university's graduate writing program.
Munger's gift is the largest in the university's history. The new, eight-story graduate residence hall will be designed to foster collaboration among its 600 residents and will cost $185 million. The balance between the cost of the building and Munger's gift will be made up with lease revenue. Munger's gift also includes $10 million for student fellowships.
Chris Pizzinat, deputy director of the office of development at University of California, Santa Barbara, says that the economic downturn has resulted in renewed interest among philanthropists who want to help students. "Public higher education, in particular, has been hard-hit, and universities are raising tuition," he says. "As opposed to 20 years ago, when tuition rates were really low, today, while still a relative bargain compared to private universities, it's starting to be too expensive for students."
It's not uncommon for donors to gift stock to universities, says Nekita Nesmith, director of development at the University of Delaware College of Arts and Sciences. "A lot of people have depreciating stocks and rather than pay capital gains, they make one-time gifts to the university," she says. Nesmith says that other one-time gifts from individuals include real estate and artwork.
Aside from a desire to help future students, tax considerations are often a driving force behind charitable gifts. Individuals who donate cash can generally deduct the value of the gift, up to 50 percent of their adjusted gross income, or AGI. In-kind donations such as stock and real property will result in a deduction of up to 30 percent of AGI. Individuals earning $250,000 or more will get a reduced deduction, based on certain thresholds.
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