Investing alongside the endowment

IRS offers opportunity for MIT charitable remainder trusts

A private letter ruling by the IRS allows MIT to invest certain charitable trusts alongside the larger university endowment. Now, when you establish a charitable trust with MIT, you can request that it be invested alongside the endowment and get approximately the same results as the endowment does.

Over the 10-year period ending June 30, 2014, the Institute’s endowment has had an annualized return of 10.9 percent.

How charitable trusts work

A charitable remainder unitrust is a fund in your name, managed by the MIT Investment Management Company (MITMCo), that pays you, or the beneficiary you name, five percent of its fair market value annually for life. If the market value of the trusts’ assets increases, so does the annual payout. A charitable remainder annuity trust operates in the same manner, except that the five percent payout is fixed and based on the value of your initial contribution to the trust. At the end of the trust term, the remaining trust assets pass to MIT, to be used according to your instructions.

Establishing a charitable remainder trust provides you with—

  • an income tax deduction,
  • possible estate tax savings, and
  • the opportunity to avoid a capital gains tax on the sale of the asset contributed to the trust.

When you contribute highly appreciated assets (such as stocks or real estate) to your trust, MIT can sell them without paying capital gains and put all of the proceeds to work for you in a more diversified portfolio.

Before you reach any decisions about creating a charitable trust as a gift to MIT, please consult your attorney, accountant, or other financial advisor.

For more information, please contact:

The Office of Gift Planning
Massachusetts Institute of Technology
600 Memorial Drive, W98-500
Cambridge, MA 02139-4822

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