Are universities the only ones who charge a fee to make a donation?

[Guest]

I told UCLA I was willing to make a substantial donation to fund a scholarship fund for students who'd suffered due to their sexual orientation or gender identity. I was a little shocked to find out I was going to get charged a 6.5% fee for making the donation! I'll still make the donation, but must confess I was a bit taken aback. Have any of you ever been charged a fee to make a donation? Is this just something universities do?

"The 6.5% fee is a one-time gift fee applied to all donations to provide essential support necessary to UCLA's overall operation... This practice is consistent with our private peers, many of which charge higher fees than UCLA. For example, Stanford charges an 8% Infrastructure Charge, and Yale charges 12%. However, it is not mandated by law, but it is UCLA policy. The fee would be required for the establishment of the fund. The gift fee is not in addition to the funding amount we've discussed. It is factored into the gift proposal..."

Incidentally, I'm getting nothing in return for the donation, such as an annuity-type payment. 

[+ purplekow]

Well I would either cut the donation to cover the fee or just call it a day and look for another worthy institution to accept my money without a charge.    I understand there is paperwork and bookkeeping that needs to be covered, but 6.5% fee to make a donation is not something that is going to encourage charitable gifts.  

[Luv2play]

9 minutes ago, purplekow said:

Well I would either cut the donation to cover the fee or just call it a day and look for another worthy institution to accept my money without a charge.    I understand there is paperwork and bookkeeping that needs to be covered, but 6.5% fee to make a donation is not something that is going to encourage charitable gifts.  

I read the information given by UCLA provided to mean they subtract the fee from your overall donation. It would not be charged to you over the amount you are donating.

I give to my alma mater annually and get a tax receipt. Also give to other schools I have attended and same deal(this is in Canada). Never in the amount that would establish a separate scholarship or bursary. In those cases, I imagine there is a cost of setting up the new program and charging a fee for the paperwork seems to me to be reasonable.

Edited July 13, 2021 by Luv2play
Clarification

[+ MysticMenace]

With the JoeMendoza fund, you do not need to pay any service charge to make a donation.

[jeezifonly]

Everybody has to have their piece of the action - no good deed etc.  Shame.

Why not pick a deserving student or two from the sites we use to search for the qualified people we discuss here… sponsor one at a time, and enjoy the… interview process. 
You want tax breaks? Buy bonds. 

[Guest]

5 minutes ago, Luv2play said:

I read the information given by UCLA provided to mean they subtract the fee from your overall donation. It would not be charged to you over the amount you are donating.

I give to my alma mater annually and get a tax receipt. Also give to other schools I have attended and same deal(this is in Canada). Never in the amount that would establish a separate scholarship or bursary. In those cases, I imagine there is a cost of setting up the new program and charging a fee for the paperwork seems to me to be reasonable.

No, it's not over the amount I'm donating, but less to the students for whom the money's intended. The money  they want to charge is far more than needed to set up the fund or do the "paperwork."

[Luv2play]

10 minutes ago, Unicorn said:

No, it's not over the amount I'm donating, but less to the students for whom the money's intended. The money  they want to charge is far more than needed to set up the fund or do the "paperwork."

Well, if you're donating say $50,000 the fee would amount to $3250. For that, they would set up a separate fund to be administered by a financial institution, they would take the interest earned annually and award it to students meeting the criteria. 

Someone would have to make those arrangements. That someone or more than one person would all need to be paid for their work.

It may seem simple but is not. If you are serious about this, just talk to the people at the University. They are very approachable in my experience of donating over the decades to worthy causes.

 

Edited July 13, 2021 by Luv2play

[+ azdr0710]

@Unicorn  instead, is there a private scholarship fund somewhere in the country that benefits your targeted students that's not connected to a particular school that doesn't charge a fee?....or a much smaller fee than UCLA's to cover the "paperwork/management".....I presume this could be looked at like investing in a managed brokerage house (Vanguard, Schwab et al)....the management fee is deducted somewhere along the way, but is really hard to see where or when

[coriolis888]

3 hours ago, jeezifonly said:

You want tax breaks? Buy bonds. 

How does one get a "tax break" by buying bonds?

The interest from federal bonds is taxable.

Perhaps you mean State and municipal bonds? 

[coriolis888]

5 hours ago, Unicorn said:

I told UCLA I was willing to make a substantial donation to fund a scholarship fund for students who'd suffered due to their sexual orientation or gender identity. I was a little shocked to find out I was going to get charged a 6.5% fee for making the donation! I'll still make the donation, but must confess I was a bit taken aback. Have any of you ever been charged a fee to make a donation? Is this just something universities do?

"The 6.5% fee is a one-time gift fee applied to all donations to provide essential support necessary to UCLA's overall operation... This practice is consistent with our private peers, many of which charge higher fees than UCLA. For example, Stanford charges an 8% Infrastructure Charge, and Yale charges 12%. However, it is not mandated by law, but it is UCLA policy. The fee would be required for the establishment of the fund. The gift fee is not in addition to the funding amount we've discussed. It is factored into the gift proposal..."

Incidentally, I'm getting nothing in return for the donation, such as an annuity-type payment. 

"I was a little shocked to find out I was going to get charged a 6.5% fee for making the donation!"

Even though your entire charitable contribution is not transferred by UCLA to the specific scholarship fund you chose, you are still allowed to deduct the full amount of your contribution for tax purposes.  How and what UCLA does with your money is not addressed in the Internal Revenue Code with respect to the university withholding a fee for their "handling" of the receipt of funds.  

Thus, you did not "get charged" a fee unless UCLA asked for additional money on top of what you proposed to contribute.  I believe you stated that no additional money was requested.  

You think 6.5% is high, try giving a contribution to a major Jesuit University in D.C. - there you will see some "heavy duty" services charges removed from charitable amounts contributed.  That will give you a "big" shock rather than a little shock.  

Edited July 13, 2021 by coriolis888
clarification

[jeezifonly]

1 hour ago, coriolis888 said:

How does one get a "tax break" by buying bonds?

The interest from federal bonds is taxable.

Perhaps you mean State and municipal bonds? 

[coriolis888]

1 hour ago, jeezifonly said:

Not to be difficult, but you initially wrote:

  6 hours ago, jeezifonly said:

"You want tax breaks? Buy bonds."

_________________________________________________

Your response does not say anything about "tax breaks" as you wrote. 

Again, U.S. savings bonds interest is fully taxable.  There is no tax savings.  

There is, however, a good feeling from investing in our country (buying bonds) for security of the funds.  

Edited July 13, 2021 by coriolis888
spelling error

[Kevin Slater]

3 hours ago, coriolis888 said:

The interest from federal bonds is taxable.

Perhaps you mean State and municipal bonds? 

Income from federal bonds is exempt from state and local taxes.

Kevin Slater

[Luv2play]

Thinking about this issue, it should be borne in mind that all charities have costs of administration, which include fundraising activities. These costs are borne by the donees. In many cases, these costs far exceed 6.5 percent. The IRS, as in Canada, does monitor what is allowable as expenses. We all remember the fake charitable activities of one former POTUS.

[+ nycman]

I wonder if this is some regulatory California charity "disclosure" requirement. 
I can’t imagine why else they would do it. It’s a horrible fundraising practice.

Obviously all donations to charity involve some amount of your donation going to cover administration.
It just seems stupid to throw it in your face like that, unless they have too. 
Even then, there’s a better way of saying it than "yeah but Stanford and Yale charge more". 
So childish. UCLA, my dear…you are neither Stanford nor Yale. 
 

For the record, if it’s an institution you believe in, I say give the money. 
At least they’re just being upfront, if unartful, about their administrative money grab. 
 

Edited July 13, 2021 by nycman

[EastCoastGuy]

Many institutions, including universities, schools, hospitals, and cultural organizations, take a certain percentage from both gifts and grants to cover overhead. Some will inform donors or grantors of this so they have the option of adding that amount. 

[Guest]

Personally, I’m not a fan of professional fundraising activities (being paid to solicit donations).  But, I acknowledge it’s a cost of survival for some organizations.  

While not terribly current, this may offer some insight.  
https://www.deseret.com/2013/11/26/20530401/new-trend-colleges-taking-money-from-scholarship-funds#tom-hiles-is-the-vice-chancellor-for-advancement-at-the-university-of-missouri-in-columbia-mo

[RyanDean]

Yeah, as @EastCoastGuy notes above, this is pretty standard administrative practice in large not-for-profits (ie those with endowments &/or those that allow for targeted giving). And, yes, this applies to class gifts as well (though not at the individual-giving level, but when more typically when the dedicated class gift transfers in full to the institution). Anything within a couple percentage points of 5% (give or take) shouldn't send up too many red flags. 

CharityNavigator.com can give a clear picture of how much of your donation actually goes to programs/services but, for universities, all targeted donations tend to (now) be managed by the development office. Targeted gifts used to be managed by departments/programs but, too often, got raided for purposes beyond the donor's wishes -- which led to some big lawsuits -- so now university development offices tend to be charged with some measure of oversight for all targeted funds to guarantee that they are disbursed in accordance with the donor's intent.

 

[EastCoastGuy]

10 minutes ago, RyanDean said:

Yeah, as @EastCoastGuy notes above, this is pretty standard administrative practice in large not-for-profits (ie those with endowments &/or those that allow for targeted giving). And, yes, this applies to class gifts as well (though not at the individual-giving level, but when more typically when the dedicated class gift transfers in full to the institution). Anything within a couple percentage points of 5% (give or take) shouldn't send up too many red flags. 

CharityNavigator.com can give a clear picture of how much of your donation actually goes to programs/services but, for universities, all targeted donations tend to (now) be managed by the development office. Targeted gifts used to be managed by departments/programs but, too often, got raided for purposes beyond the donor's wishes -- which led to some big lawsuits -- so now university development offices tend to be charged with some measure of oversight for all targeted funds to guarantee that they are disbursed in accordance with the donor's intent.

 

Grants are “taxed” even more than gifts. The administrative overhead for gifts is usually in the range of 2-8%. For grants it is often 40% or higher, sometimes over half. 

[Luv2play]

3 hours ago, EastCoastGuy said:

Grants are “taxed” even more than gifts. The administrative overhead for gifts is usually in the range of 2-8%. For grants it is often 40% or higher, sometimes over half. 

Can you clarify that statement? What grants are you referring to as opposed to what gifts?

[Kevin Slater]

31 minutes ago, Luv2play said:

Can you clarify that statement? What grants are you referring to as opposed to what gifts?

3 hours ago, EastCoastGuy said:

Grants are “taxed” even more than gifts. The administrative overhead for gifts is usually in the range of 2-8%. For grants it is often 40% or higher, sometimes over half. 

I assume he's referring to the indirect cost rate of doing government research.  It is common practice for universities to apply an additional fee on top of research grants they receive to cover costs borne but not directly attributable to specific research projects (e.g. library usage, building maintenance, payroll administration).  The IDC rate can often be in the 80% range.

Kevin Slater

[dbar123]

At least UCLA was upfront about it. It gives you the chance to put your money at a place that will use it more efficiently. That overhead rate does not sound that out of line to me.

[EastCoastGuy]

47 minutes ago, Kevin Slater said:

I assume he's referring to the indirect cost rate of doing government research.  It is common practice for universities to apply an additional fee on top of research grants they receive to cover costs borne but not directly attributable to specific research projects (e.g. library usage, building maintenance, payroll administration).  The IDC rate can often be in the 80% range.

Kevin Slater

Yes, that is what i am referring to, although it’s not just government grants and not just universities. 

[coriolis888]

8 hours ago, Kevin Slater said:

Income from federal bonds is exempt from state and local taxes.

Kevin Slater

True, exempt only from state and local.  

However, the federal tax rate can be 37%, depending on ones income.   While many states have no tax or have low rates of tax. 

[Luv2play]

1 hour ago, Kevin Slater said:

I assume he's referring to the indirect cost rate of doing government research.  It is common practice for universities to apply an additional fee on top of research grants they receive to cover costs borne but not directly attributable to specific research projects (e.g. library usage, building maintenance, payroll administration).  The IDC rate can often be in the 80% range.

Kevin Slater

All of which proves that universities, besides being seats of learning and scholarship, are also businesses.