February 2008 Issue
front lines
Education Foundation Arrangements Will Double Capital Reserves
BY DR. DAVE DEVENNY, P.ENG., P.GEOL.
APEGGA Education Foundation President
Thanks to recent trust agreements with the University of Alberta and the University of Calgary, the APEGGA Education Foundation can now take your gift and grow it to 400 per cent of the after-tax cost to you, the donor. And if your employer has a program to match charitable donations, the total benefit doubles again to 800 per cent.
It’s hard to beat that level of enhancement.
APEGGA Council recently endorsed the trust agreements, which will put this growth to work for future members as they develop academically. Under the agreement, the foundation’s capital fund, worth about $1 million, will be transferred to the universities.
Investment in the university trusts simplifies administration for the foundation. The universities will manage programs according to terms outlined in the trust agreements. The university trusts easily meet the Canada Revenue Agency’s disbursement obligations so they’re able to build our capital reserves — indeed, the universities guarantee they’ll double them within five years.
The trust agreement is a good fit with the foundation’s business plan, which calls for a doubling of the $1 million capital reserve fund. Then expenditures on scholarships that cost over $100,000 per year can be sustained from the interest generated.
It is very difficult to accumulate capital under current tax rules. One such rule obliges charities to spend 80 per cent of funds collected from taxable sources during the next year. Another obliges charities to spend 3.5 per cent of their capital reserves annually starting in 2009. Those terms are so onerous they make capital appreciation almost impossible.
The universities will
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administer the foundation’s programs to support education in the fields of engineering, geology and geophysics in the name of the foundation
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use interest from investments to fund foundation programs and allow the trust to grow
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charge a low administration fee of about one per cent
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provide one-to-one matching funds from the Alberta Access to the Future Fund, which the universities administer, within five years.
The foundation offers a good return for donations through
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programs in support of education being adjusted to maintain effectiveness and relevance
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donations over $200 qualifying for a 50 per cent income tax rebate when current federal and Alberta rebates are considered
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university trust agreements matching one-to-one within five years
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extremely low overhead — so donations go where intended.
Why not double your money in just five years?
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Contact Foundation President
Dr. Dave Devenny, P.Eng., P.Geol.
edufound@apegga.org