Corporations may establish accounts within the NC State Foundation to accept donations from alumni for the purpose of funding portions of their chapter house that are deemed for “educational use” by the IRS. Corporations may also fund their infrastructure assessments through the Foundation.
Questions related to the NCSU Foundation receiving gifts for construction of Greek Village houses.
- Can the NC State Foundation establish accounts and receive funds raised by individual fraternity/sorority groups for the purposes of constructing a privately owned chapter house on land leased from the University?
NC State Foundation has three types of accounts to receive contributions from individual fraternity/sorority groups for the construction of a privately owned chapter house.
1) Agency Fund (specific to Fraternity/Sorority group)
Agency funds can receive the non tax-deductible portions of the contributions. Individuals making contributions to these funds will not get tax receipts. Pledges will not be recorded on agency funds; only cash contributions will be processed.
2) Restricted fund (specific to Fraternity/Sorority group)
Restricted funds can receive funds for the tax-deductible portions of contributions made to the fraternity/sorority group. To setup a restricted fund, NC State Foundation would need a letter from the chapter’s tax counsel indicating what portion is tax-deductible. The letter from each fraternity/sorority group’s tax counsel should be addressed to the Vice Chancellor, University Advancement, and President of the NC State Foundation. Per University policy, contributions to this fund will be assessed 7% gift assessment fee. Pledges maybe recorded on restricted funds– Office of Greek Life will need to coordinate reminders.
3) Greek Redevelopment Fund
This fund has been setup to receive tax-deductible contributions for for fraternity/sorority groups to pay for the infrastructure fee and parking assessment. Per University policy, these gifts will not be designated to individual chapter houses and contributions to this fund will be assessed 7% gift assessment fee. Donations that exceed your anticipated infrastructure and parking assessments cannot be applied to the restricted fund at a later date. Contributions should be limited to your anticipated fees and assessment unless they are intended to fund the overall project. Pledges maybe recorded on this fund — Department of Fraternity and Sorority Life will need to coordinate reminders.
Only cash contributions (no gifts-in-kind) will be processed. In order to keep the tax-deductible portions of the contributions separate, it would be preferred if the individual made out checks to the NCSU Foundation clearly identifying in the memo line allocation to each distinct fund. It will be fraternity/sorority group’s responsibility to ensure that documentation/separate checks for each portion are made available for processing. The NCSU Foundation will process tax-deductible contributions for the restricted fund only up to the amount ruled as educational space use by the fraternity/sorority group’s tax opinion letter. These funds will not be available as options on the University’s online giving form.
2. Can the Foundation credit donations to these projects against a donor’s lifetime giving to the University?
Yes, contributions to these accounts, specifically set up to support the costs associated with the construction of their chapter houses, will be counted towards a donor’s life-time giving and their membership in the recognition societies. This benefit will also be extended to individuals who make contributions in support of the Greek Village chapter housing projects directly to national housing corporations (provided the national housing corporations are willing to provide this information to NC State).
3. How will the Foundation manage the issue of tax-deductibility for individual gifts given that portions of each project are either 100% deductible (infrastructure assessments) or variable based upon the design of each chapter house (percentage of space deemed for educational use)?
Until each fraternity provides the NC State Foundation with a letter from its tax counsel indicating what percentage of the total project is tax deductible, NC State Foundation will not be able to provide tax receipts. The letter from each fraternity’s tax counsel should be addressed to me as Vice Chancellor, University Advancement, and President of the NC State Foundation.
NCSU Foundation has set up a separate fund for Infrastructure Assessments and those tax-deductible contributions need to be made out to the Greek Redevelopment fund. See Response #1.
4. Should the Foundation only accept funds that will be used for items that are 100% deductible?
This will vary depending on the fund setup by each fraternity/sorority group. The groups may choose not to use the NCSU Foundation for processing their contribution. In those cases contributions will be counted towards a donor’s life-time giving and their membership in the recognition societies. See #1
5. How will individual organizations obtain their ruling on educational space and if that comes after fund-raising has taken place, how does the Foundation resolve this issue of tax deductibility for donors?
It is recommended that the fraternity/sorority group consult with their tax counsel to obtain ruling on educational space. Until each fraternity/sorority group provides the NC State Foundation with a letter from its tax counsel indicating what percentage of the total project is tax deductible, NC State Foundation will not be able to provide tax receipts. It is recommended that the fraternity/sorority group do not begin processing contributions for the tax-deductible portions until such tax counsel letter is obtained and submitted to the University.
6. Can a fraternity/sorority use funds in their Foundation account funds for on-going operational costs associated with the educational space in the house? For example, can they pay a portion of their annual utilities relative to that space and how would we determine that amount? How would we disburse those funds each year?
Given the complexity of this financial relationship with the fraternities/sororities, the NCSU Foundation is not interested in pursuing this arrangement at this time.