Go to content Go to navigation Go to search

April 07, 2009

More Colleges Ask Donors to Pay Pledges Early

Cornell University’s request to one of its top donors, Sanford I. Weill, to pay his $250-million pledge early — and at a reduced rate — may be a tactic more nonprofit organizations could use to raise much-needed cash in this recession.

Brown University has made similar requests, giving donors a discount in exchange for early pledge payments. One foundation, scheduled to complete a $25-million donation to the university in 2012, will instead pay the college $23.9-million this June.

Mr. Weill and his wife pledged $250-million to Weill Cornell Medical College in 2007 as part of a $300-million donation to the university. The bulk of that amount was a bequest, said John D. Rodgers, a spokesman for the medical college, and some it comes from the couple’s family foundation.

On Tuesday, the college announced the Weills had fulfilled their pledge early with a cash gift of $170-million, which was paid to Cornell in December and January. It will help pay for the construction of a new research building scheduled to start this year.

Last year David J. Skorton, Cornell’s president, along with Peter C. Meing, chairman of the university’s Board of Trustees, asked Mr. Weill, the chairman of the board of overseers for the medical college, if he would consider paying his pledge early.

Cornell and the Weills negotiated on the amount of the cash gift, taking into account the time between now and when the university could expect to receive money from a Weill bequest. They settled on $170-million.

“We felt this was a fair compromise, as well as a good way to spur other donors to give,” Mr. Rodgers said. Part of the gift will be used for a naming challenge, giving $1 for every $1.50 donated so that new donors can have naming opportunities at a discount.

(Read a Chronicle of Philanthropy profile of Mr. and Mrs. Weill.)

— Kathryn Masterson

Tuesday April 7, 2009 | Permalink

Comments

1. The problem from Mr. Weil’s standpoint is that he does not get to offset an inter vivos gift against his estate taxes. The tax break he would get from even a $250 million donation during his lifetime would be much less than his estate would get from donating the same amount after he dies. That’s surely the reason he originally said Cornell could only have the money after his death.

   I’m sure Cornell and Mr. Weill factored this into their negotiations, but the article suggests that all that mattered was the present value of the future gift. It should have at least briefly discussed the taxation issues, too.

   — CU Alum    Apr 8, 04:31 PM    #

2. I’m with CU Alum big time. The “discount donation” concept has far reaching impacts and, I believe, problems if all the ramifications are not clearly understood from the beginning.

   — Susan    Apr 8, 05:53 PM    #

Commenting is closed for this article.

Previous: The Value of Word-of-Mouth Promotions
Next: Confusing Web Sites Discourage Donors From Online Giving

---

Copyright © 2009 The Chronicle of Philanthropy