Corridor, a newsletter from MIT’s Office of Gift Planning, provides insights into planned giving strategies that can help you meet your financial goals while supporting the mission of MIT.
Fall 2020: Featured Stories
Uniting as an MIT Community
Amy Goldman, Senior Director
Dear Corridor readers,
As an institution steeped in innovation, MIT has fast-tracked Covid-19 research, rapid testing, and deployment of personal protective equipment to health care workers. Science and solutions live and breathe at MIT, and the reach of our collective community extends well beyond campus. For more on how MIT is addressing Covid-19, visit now.mit.edu.
MIT has many strengths, one of them being the Institute’s endowment, which is managed by the MIT Investment Management Company (MITIMCo). Powered by investment strategies that were designed to weather economic change, even change driven by a pandemic, the endowment is valued at $18.4 billion as of June 30, 2020, with a rate of return of 8.3% for the fiscal year. MITIMCo’s mission to ensure the Institute thrives for the long-term, in partnership with your support, steadies us.
Since March, we have heard from many of you with questions about the CARES Act, your existing planned gifts, and consideration of new gifts. We have been honored to work with you to good outcomes. Keep the questions coming! While our website is full of information, we’ve learned that donors often find it most helpful to talk one-on-one via phone or email: 617.253.4082 or email@example.com.
Senior Director, MIT Office of Gift Planning
From the Katharine Dexter McCormick (1904) Society Co-chairs
Heather Cogdell ’89 and Bob Johnson ’63
When we became co-chairs of the Katharine Dexter McCormick (1904) Society (KDMS) last year, we were eager to continue the important work of uniting and honoring individuals and families who make a bequest or life-income gift to MIT. While we could not meet on campus for our annual KDMS appreciation brunch and other events, one positive outcome was that we could include the many members who ordinarily would not travel to Cambridge. We could still come together and engage with our MIT family. Our first virtual KDMS appreciation event in September was a wonderful opportunity to gather online and learn more about the MIT Museum and its new home in Kendall Square. We are also delighted to have welcomed more than 100 new members this year, bringing our ranks to more than 1,800.
We could never have anticipated how drastically the world would change this year. But what has not changed is our admiration for our members’ generosity and our excitement about what we as a community can accomplish together. Thank you for being a part of our community as we look to the future and MIT’s continued work to make a better world.
Heather Cogdell ’89
Bob Johnson ’63
Flexible Giving, Inspired by Students
James ’72 and Muguette Alder
Jim Alder’s 40th Reunion in 2012 marked a new era in his involvement with MIT. He began to volunteer as an educational counselor, and he and his spouse, Muguette, made their first planned gift to the Institute, a charitable remainder trust (CRUT). In 2019, the couple formed a new planned giving strategy and established an MIT Donor-Advised Fund to align with their changing priorities.
Getting to know MIT students.
A CRUT provides income to a donor and their beneficiaries, and when it terminates, the gift goes to a designated cause at MIT. The Alders directed their CRUT to undergraduate scholarships. “Supporting scholarships is especially important to me, as I had financial issues while at MIT,” says Jim. “We established the CRUT wanting to donate to MIT and expecting to need additional income to support our retirement lifestyle.”
Establishing a CRUT, like other planned gifts to MIT, welcomed the couple into the Katharine Dexter McCormick (1904) Society (KDMS). “From day one, everyone was so wonderful and welcoming toward us,” says Muguette. “Hearing students’ incredible stories at events like the annual KDMS member appreciation brunch is what made me want to get more involved with MIT.” Getting to know MIT students in that capacity, as well as Jim’s work as an educational counselor, inspired the Alders to also establish an endowed scholarship fund in 2015.
As the Alders’ engagement with MIT grew, they realized that their planned giving strategy needed to change. “We discovered that we don’t need the additional income from the CRUT in retirement,” says Jim. “Terminating the CRUT, as we did in 2019, provides MIT the money sooner to support undergraduate scholarships while giving us a one-time additional charitable tax deduction.”
“Given our interest in continuing to support MIT, establishing a Donor-Advised Fund was a logical next step.” — Jim Adler
In 2019, the Alders also invested in a different planned giving instrument: an MIT Donor-Advised Fund (DAF). “Given our interest in continuing to support MIT, establishing a DAF was a logical next step,” says Jim. “We will accumulate money in the fund over the next several years and watch that money grow through the MIT endowment’s track record of returns. Our current plan is to use some of our fund to support other charities, but give most of it to MIT.”
The importance of supporting MIT.
Beyond their planned giving strategy, the Alders’ personal experience influenced their giving to MIT when they established a graduate fellowship in the Department of Brain and Cognitive Sciences in 2017. “We have family members with brain-related medical conditions and understand the impact of these conditions both on individuals and society. We are optimistic there will be research breakthroughs in the near future, with MIT playing a key role,” says Jim.
The Alders suggest that if others are considering a gift to MIT, a CRUT through the Office of Gift Planning is a great starting place—especially for scholarship support. “At MIT events, I love to hear from the students about their background, current activities, and future plans,” says Muguette. Jim agrees: “Hearing from MIT students will tilt you pretty quickly toward the advantages and the value in the money you will donate, no matter what type of gift you make.”
A Legacy of Support for MIT Scholarships
Thomas Davis ’84, SM ’85 and Elizabeth Beliveau Davis ’84, MArch ’88
Although Tom and Betsy Davis, now married 22 years, were MIT undergraduates at the same time, their relationship didn’t begin until several years later. But that common undergraduate experience made their decision to establish the Tom and Betsy Davis Scholarship Fund a natural one. Tom and Betsy’s support has already helped two students attend MIT, and thoughtful planning—with the help of the MIT Office of Gift Planning—has ensured that the fund will outlive them and support many more.
“We knew we would need to pay for our children’s college education, but realized we could help get more young people through school financially,” says Tom. “Were we to pass away before our scholarship was completely funded, a bequest would bump up the total principal in the fund to complete it.”
With their two children now in college, why fund scholarships for young people they don’t know? “We both benefited from the generosity of others,” says Tom. “Betsy had scholarships from MIT, and I had scholarships from other entities. Our undergraduate years were incredibly formative. To help others have that experience means a lot to us.”
Celebrating the MIT experience.
Today, Betsy is associate director of facilities at Phillips Academy Andover, while Tom focuses on data-intensive work in supply chain management for a Palo Alto consulting firm. Both have happy memories of their time at MIT. “There were moments in class where the waters parted somehow and you could see truth in its purest form,” says Tom, “but some of the best moments for me happened while walking to and from school every day with friends.” Betsy agrees: “Some of my dearest friends are MIT friends. When we reconnect, there’s this bond and shared history of figuring out who you are and what you believe in by having intense conversations with really smart, engaged people.”
“Our undergraduate years were incredibly formative. To help others have that experience means a lot to us.” — Tom Davis
Tom, who has met the two recipients of the scholarship fund in person, was inspired by the students’ accomplishments. “If we can knock down the financial burden for them a bit, they’ll be more focused on what they came here to do,” says Tom. “To be exposed to all the things available at MIT and not take advantage of them because you’re worried about money is not making the best use of those four years.”
Achieving goals for the future.
Planned giving made sense to Tom and Betsy because it ensured that they could finish what they started. “For the longest time, I thought funding a scholarship was completely unattainable,” says Tom. “We’re just workaday engineers. Then I started looking at it and realized it was doable.” He hopes others will follow suit. “Consider creating a scholarship fund! Build that fund over your lifetime and top it off with a legacy gift. You don’t have to build a building to have an impact. Just think: ‘I can help a couple of kids get through MIT.’”
“Funding a scholarship feels like an investment in the future for everyone,” adds Betsy, “because the things students can do and the impact they can make with a little bit of assistance from us is incredible.”
Starting an Income-Generating Gift Annuity
Life-income gifts are a cornerstone of planned giving at MIT
Joe Levitch ’69 has given to MIT in a variety of ways, from mentoring and volunteering to establishing a scholarship fund and an athletics leadership program. Here, he is pictured at the 2019 Katharine Dexter McCormick (1904) Society brunch with Jason T. Necaise ’20, one student who has received financial support from scholarships he has funded. Joe’s charitable gift annuity (CGA), made through the Office of Gift Planning, is unique among the other ways that he supports the Institute. “The main reason for establishing the CGA was to create a predictable retirement income flow—something we all need at some point in our lives—with payout rates that are more attractive than most other alternatives,” he says.
Besides additional income, he also names MIT endowment returns and tax advantages as key benefits to a CGA. “The CGAs are invested alongside the MIT endowment, whose expert investment team at MITIMCo continues to produce returns that exceed those of my commercial investment advisors, with less volatility. This benefits MIT and the student needs that I support since the MIT endowment’s returns are likely to be greater than the value of my personal investment accounts,” he explains. “A CGA also allows me to enjoy tax advantages now while I still have an income tax liability and has the potential to reduce my estate taxes in the future.”
Life-income gifts are a cornerstone of planned giving at MIT, simultaneously providing income for donors while supporting the Institute. A CGA is an irrevocable gift that can be established with a gift of $20,000 or more, and annuitant(s) must be at least 50 years old at the time that payments begin. You have three options for annuity payments: immediate; deferred to a specific date; or flexible-deferred, in which you can give now and decide later when to initiate payments. Deferred payments will garner a higher interest rate (see this chart of the most current charitable gift annuity rates). The remainder of your gift becomes available to MIT for the purpose you have chosen when the annuity expires, whether it be scholarships, fellowships, research support in a specific area, or an unrestricted gift.
If you are interested in creating a CGA, MIT’s experienced gift planning team can answer your questions in a confidential discussion and provide you and your financial advisor with personalized gift calculations.
Q&A: Scholarships and Admissions Policies at MIT
Stuart Schmill ’86, Dean of Admissions and Student Financial Services
Following Stuart Schmill’s graduation from MIT, he spent a year working as a project engineer at General Motors before returning to the Institute in a professional role. Since then, he has served in a variety of positions, including director of crew; director of Parent, Student, and Young Alumni Programs in the MIT Alumni Association; and director of the MIT Educational Council. He became dean of admissions in 2008 and added Student Financial Services to his portfolio in 2016. Schmill spoke with the MIT Office of Gift Planning about MIT’s distinctive admissions policies and gift planning’s role in generating scholarship support.
What makes the admissions and financial aid policies at MIT different than those of its peer institutions?
SS: We are proud that MIT’s undergraduate admissions and financial aid policies allow us to live our values. We are one of a small number of US colleges and universities that make admissions decisions without regard to whether the student can afford to pay, and one of only five that can say this for both US and international students. Furthermore, we are one of a very small number of schools to offer completely meritocratic admissions policies: we grant no extra advantage for the children or grandchildren of MIT alumni. And, while we have students with exceptional extracurricular talent, such as in athletics, every student meets the same high academic standards. Finally, we do not offer merit scholarships of any kind—the financial aid we offer to undergraduate students is based only on financial need. This allows us to use our funds most efficiently for the families that need aid the most.
How has the admissions process been affected by the Covid-19 pandemic?
We are suspending our SAT/ACT requirement in the 2020–2021 application cycle and expanding the number of tests that can be used to demonstrate English proficiency. More generally, we are committed to upholding our longstanding general policy for disasters and disruptions, in which we remind students to focus first “on taking care of yourself, your family, your community, and your safety." We do not penalize them for crises beyond their control. These topics are outlined in more detail on the MIT Admissions blog.
What is the median amount of an MIT scholarship, and how are MIT scholarships funded?
SS: The median scholarship in the 2019–2020 academic year was approximately $56,000, more than our nearly $53,500 tuition and fees. Almost all of MIT scholarship funds come from philanthropy.
What are the main challenges that you and your team face?
SS: Maintaining need-blind admissions and fullneed financial aid policies for all undergraduates is expensive—this is why policies such as ours are so rare. MIT has made this commitment, but the costs of maintaining our financial aid program are rising faster than our revenues. Securing our ability to maintain MIT’s meritocratic principles and values will depend on the continued generosity of our alumni and friends as well as the commitment we make as a community.
What role can planned giving play in funding scholarships?
SS: Almost all of MIT scholarship funds come from philanthropy: Our scholarship support is so robust because of the generosity of our alumni and friends who make scholarship gifts in a variety of ways. A scholarship funded through a life-income or bequest gift will establish a lasting legacy for the donor while supporting MIT students who will go on to make their own mark on the world. Donors’ foresight when planning their estate can help to ensure that we can support students today and into the future.
To learn more about how scholarships make a difference in the lives of MIT students, visit the Better World website.